AANNDD CCOONNTTRROOLLLLEEDD EENNTTIITTIIEESS
JJooyyccee CCoorrppoorraattiioonn LLttdd
AAnnnnuuaall RReeppoorrtt 22001133
CCeelleebbrraattiinngg 112277 YYeeaarrss iinn BBuussiinneessss
Joyce Corporation Ltd
AND CONTROLLED ENTITIES
ABN: 80 009 116 269
Annual Report 2013
Joyce Corporation Ltd 2013 Annual Report I PAGE 1
Corporate Directory
Directors
Secretary
D A Smetana
Chairman
M A Gurry
T R Hantke
A Mankarios
K Gray
Notice of annual general meeting
The Annual General Meeting of Joyce Corporation Ltd
will be held at Bedshed Central Office
14 Collingwood Street
Osborne Park 6017
Western Australia
time:
date:
10:00am
21 November 2013
14 Collingwood Street,
Osborne Park, WA,
Asutralia, 6017
Tel: +61 8 9445 1055
Computershare Investor Services Pty Limited
Level 2, Reserve Bank Building,
45 St Georges Terrace
Perth, WA 6000
BDO (WA) Pty Ltd
38 Station Street
Subiaco WA 6008
Australia
MDS Legal
Level 2, 16 Irwin Street,
Perth WA 6000
Australia
St George Bank
Level 2 Westralia Plaza
167 St Georges Terrace
Perth WA 6000
Australia
Principal registered office
Share register
Auditors
Solicitors
Bankers
Stock exchange listings
Joyce Corporation Ltd shares are listed on the Australian
Securities Exchange (ASX ticker: JYC).
Website address
www.joycecorp.com.au
ABN:
80 009 116 269
Joyce Corporation Ltd 2013 Annual Report I PAGE 2
ANNUAL REPORT CONTENTS
ANNUAL REPORT CONTENTS ................................................................................................................... 3
CHAIRMAN’S REPORT ............................................................................................................................... 4
DIRECTORS’ REPORT ................................................................................................................................ 7
AUDITOR'S INDEPENDENCE DECLARATION .......................................................................................... 19
CORPORATE GOVERNANCE STATEMENT ............................................................................................. 20
CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME............ 35
CONSOLIDATED STATEMENT OF FINANCIAL POSITION........................................................................ 36
CONSOLIDATED STATEMENT OF CASHFLOWS ..................................................................................... 37
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY ........................................................................ 38
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS .................................................................. 39
CORPORATE INFORMATION ...................................................................................................... 39
1.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES .............................................................. 39
2.
GOING CONCERN ....................................................................................................................... 52
3.
FINANCIAL RISK MANAGEMENT ................................................................................................ 52
4.
CRITICAL ACCOUNTING ESTIMATES AND JUDGEMENTS ........................................................ 57
5.
SEGMENT INFORMATION ........................................................................................................... 57
6.
REVENUE, INCOME AND EXPENSES ......................................................................................... 60
7.
INCOME TAX ............................................................................................................................... 61
8.
DISCONTINUED OPERATIONS ................................................................................................... 65
9.
EARNINGS PER SHARE .............................................................................................................. 66
10.
CASH AND CASH EQUIVALENTS ............................................................................................... 67
11.
TRADE AND OTHER RECEIVABLES ........................................................................................... 67
12.
INVENTORIES ............................................................................................................................. 68
13.
OTHER ASSETS .......................................................................................................................... 68
14.
NON-CURRENT ASSETS CLASSIFIED AS HELD FOR SALE ...................................................... 69
15.
OTHER FINANCIAL ASSETS ....................................................................................................... 69
16.
PLANT AND EQUIPMENT ............................................................................................................ 70
17.
INVESTMENT PROPERTY ........................................................................................................... 71
18.
19.
INTANGIBLE ASSETS .................................................................................................................. 72
20. TRADE AND OTHER PAYABLES ................................................................................................. 73
INTEREST BEARING LOANS AND BORROWINGS ..................................................................... 74
21.
PROVISIONS ............................................................................................................................... 76
22.
23. CONTRIBUTED EQUITY .............................................................................................................. 77
RESERVES .................................................................................................................................. 78
24.
CAPITAL AND LEASING COMMITMENTS.................................................................................... 78
25.
CONTINGENT LIABILITIES .......................................................................................................... 80
26.
RELATED PARTY DISCLOSURES ............................................................................................... 80
27.
EVENTS AFTER REPORTING DATE ........................................................................................... 81
28.
AUDITORS’ REMUNERATION ..................................................................................................... 81
29.
DIVIDENDS .................................................................................................................................. 81
30.
KEY MANAGEMENT PERSONNEL DISCLOSURE ....................................................................... 82
31.
RECONCILIATION OF NET PROFIT AFTER TAX TO NET CASH FLOWS FROM OPERATIONS . 84
32.
NON-CASH INVESTING AND FINANCING ACTIVITIES ............................................................... 84
33.
34.
PARENT ENTITY DISCLOSURES ................................................................................................ 85
DIRECTORS’ DECLARATION .................................................................................................................... 86
INDEPENDENT AUDITOR’S REPORT ....................................................................................................... 87
ASX ADDITIONAL INFORMATION ............................................................................................................. 89
Joyce Corporation Ltd 2013 Annual Report I PAGE 3
CHAIRMAN’S REPORT
I am pleased to announce the net consolidated result for Joyce Corporation Ltd to 30thJune 2013 of
$0.668 Million. This compares with a profit of $3Million for last year to 30th June 2012.
The underlying profit for this period for continuing operations was $2.2M after tax, whilst the operating
cash flow remained above expectations. The comparative year ended 30 June 2012 included a one-off
property revaluation increase $3.5M before tax against a current year revaluation $1.26 M.
Operating cash flow has continued to improve with continuing operations increasing to $1.4 Million for
year compared to $1.2 Million for the prior year ended 30 June 2012.
An interim dividend was paid on 24th July 2013 for 1 cent unfranked per ordinary share.
A decision on the quantum of the final dividend will be reviewed and announced at the appropriate time.
The Company’s franchise business Bedshed performed well and above expectations.
Total network sales grew modestly in 2013 on a year on year, like for like basis.
As previously announced the year’s result was a transition from underperforming Bedshed Company
owned stores in Regional Australia and stand-alone locations and investing in the future growth of the
group’s activities within our highly successful Bedshed Franchise model.
We are pleased to announce that a surrender of lease was negotiated with Centre Management at
Mittagong in NSW and we have exited this company owned store in early August 2013.
We have taken up store closure provisions in the year end results which, together with discontinuing
operations losses, totals $1.57M. The lease surrender negotiations have seen a net savings effect on
over all potential liability to the full term of the leases in all cases.
The group has a very valuable asset with its 41,840 sq m industrial property site at Bridges Road
Moorebank. This is in South West Sydney and adjoins the Georges River and is attainable from the
on/off ramp of the busy M5 Motorway. This property is currently rented to a leading Australian Foam
manufacturer at sub-economic market rents. The past registered independent valuation was $17.9M,
with sub-economic rent contributing to the lower carrying value in the accounts.
It is the company’s intention that it seek to divest this property asset in the fullness of time.
I am pleased to announce the company has received a notification from the tenant advising it will seek
to take–up the option for a further 10 years at a commercial rent and confirmed their interest in
potentially purchasing the property.
This additional rent in the near future will see a positive net performance lift and the company is
budgeting strong ongoing profitability as a result of difficult decisions the board undertook this year with
respect to company owned stores.
The group is in a financially conservative gearing position and may seek to leverage its strong balance
sheet in the near future to improve the returns to shareholders.
It is important to note the company has $2.0M of inventory tied up in company stores.
I would like to recognise the efforts and achievements of the Board and the Executive Director, Mr
Anthony Mankarios and the entire Management team in addressing and resolving outstanding issues
and placing our Group in a far stronger position to undertake sustained renewed growth.
I commend the Group’s prospects to you.
Dan Smetana
Chairman
Joyce Corporation Ltd 2013 Annual Report I PAGE 4
EXECUTIVE DIRECTOR’S REPORT
Operational Review
Bedshed, one of our core Business Units (BU’s), managed to expand its network sales during the year.
It grew modestly year on year and like for like with total network written sales.
This growth was aided by the introduction of the new generation store fit-out, design and point of sale
program called the Bedshed Evolution Program. We anticipated continuing growth as additional stores
embrace the new fit-out.
A new franchisee was approved to take over from the Nunawading Victorian Franchise store which
ceased operations in January 2013. This store opened in August 2013 with the new evolution fit-out
program.
During the year management was heavily involved with setting and implementing targeted exit
strategies for existing company owned stores in regional areas and stand-alone locations, which had
been determined as being in less than optimum positions.
The leases were terminated with 4 stores during the period and a non-recurring provision was taken up
in our books as a result. There is another location that was exited in August 2013. In each case, these
exits will save the company significant expense over the remaining term of the leases.
Non-recurring losses and provisions in aggregate totalled $1.57M before tax in the final accounts.
Additional provisions taken up at 30 June 2013 for closed and closing stores was $0.35M.
The following Company owned stores were exited:
(cid:120) Warners Bay NSW
(cid:120) Shepparton Vic
(cid:120) Bendigo Vic
(cid:120) Wodonga Vic
The company will seek to franchise in better locations where our demographics suit the quality product
mix.
The Company’s Moorebank Property underwent a series of improvements during the year. The 41,840
square meter site is located near the Georges River and in proximity to the proposed $400M Inter-
modal development in 2014, aimed at relieving container freight away from busy Port Botany and
improving congestion on the busy M5 Motorway that accesses the site.
The existing tenant has indicated their desire to progress with the 10 - year lease option in 2015 should
they not be successful in purchasing the property.
The property has been carried in our books at sub-economic rent valuations. This will cease in late
November 2015, when rents move to market rents. With each year approaching 2015 the valuation
approaches the commercialisation rents and as such an appropriate lift in the property value is taken up
toward the value based on an independent registered valuer’s report.
The Directors have also further valued the property based on market information from external valuers,
recent sales values and recent rents achieved that are published by independent third parties. The
decision was based on increased rental rates and reducing yields. To determine the value the rent was
left unchanged even though there was evidence increases and a yield of 9% on market rent was used
which results in total valuation increase of $416K before tax.
The Company not only took part in cost reduction programs set to guide the group into maintainable
future profits; it also enhanced the Company’s prospects considerably. A Joyce Corporation subsidiary
took up a convertible notes investment in KWB Group Pty Ltd (KWB) during the latter half of this
financial year. KWB’s current management team also elected to invest alongside Joyce.
Joyce Corporation Ltd 2013 Annual Report I PAGE 5
EXECUTIVE DIRECTOR’S REPORT (CONTINUED)
KWB group is the largest specialty independent retailer of kitchens and wardrobes in Australia, with 12
stores in Qld, SA and NSW at 30 June 2013. Joyce aims to enhance the group by assisting with the
introduction of a suitable structure for their franchise business expansion across Australia.
Joyce will consider whether it will convert its secured notes in the group into majority stake equity at
some stage in the near future. At this point, should the Company elect to convert, the KWB group’s
estimated $25M revenue will be consolidated into Joyce Corporation’s accounts creating significant
growth in our retail footprint across Australia.
The board undertook an auditor review in late 2012, BDO Perth was appointed as the new auditors after
the AGM resolution was carried for this financial year. This pro-actively resulted in a thorough
constructive review of past treatments to the accounting standards. BDO have outlined accounting
adjustments required to meet the standards in the accounts pertaining to periods prior to 2007. This has
resulted in a re-instatement of the prior year accounts in this period. As a result $389K affected the prior
year Consolidated Statement of Financial Position as an equity item. There was also a reclassification
from retained earnings to revaluation reserves of $2.62m pertaining to 2006 that has not affected the
net equity.
Future Outlook
The Company has taken significant provisions to ensure future maintainable profits provide adequate
returns to shareholders.
The exit of its Company owned store at Mittagong took place in August and this one-off expense
provision was taken up in this reporting period.
The Company’s prospects are positive given the recent lift in activity in its core Bedshed Franchising
business. Currently operations are currently meeting profit expectations in a challenging retail
environment. The Company’s significant property asset at Moorebank will underpin the group’s activities
and growth plans.
The retail market continues to remain subdued as consumer confidence, a federal election and a
sluggish housing market impact on the market. Further reductions in interest rates should be positive
and underpin consumer confidence. There remains risk from the decline in employment from the run off
from the mining industry. A decline in the Australian dollar against the US dollar also has the potential to
reduce margins and this is being addressed through newer lower cost products, product ranging
decisions and a continued focus on cost management. The Company remains in a positive cash
position with adequate undrawn bank facilities and a low net debt position that provides flexibility to
undertake future acquisitions and grow the Bedshed franchise network.
Rounding of Amounts
The Consolidated entity has applied the relief available to it in ASIC Class Order 98/100 and
accordingly certain amounts in the financial report and the Directors’ Report have been
rounded off to the nearest $1,000.
This report is signed in accordance with a resolution of the Board of Directors
Anthony Mankarios
Executive Director
Joyce Corporation Ltd 2013 Annual Report I PAGE 6
DIRECTORS’ REPORT
Your Directors present their report on the Consolidated Entity, consisting of Joyce Corporation Ltd (“the Company”) and
the entities it controlled at the end of, or during, the year ended 30 June 2013.
DIRECTORS
The names of the Company’s Directors in office during the year ended 30 June 2013 and until the date of this report are
as below. Directors were in office for this entire period unless otherwise stated.
Chairman (non-executive)
Non-executive Director
Non-executive Director
Executive Director
Mr D A Smetana
Mr T R Hantke
Mr M A Gurry
Mr A Mankarios
SECRETARY
Mr K Gray
PRINCIPAL ACTIVITIES
During the year the principal continuing activities of the Consolidated Entity consisted of being:
(a) The franchisor of the Bedshed chain of retail bedding stores; and
(b) An owner of a number of Bedshed retail stores.
(c) Property Investment
No significant changes in the nature of the activities of the Consolidated Entity occurred during the year.
REVIEW AND RESULTS OF OPERATIONS
During the year ended 30 June 2013 (“the Financial Year”) the Consolidated Entity, achieved revenue from continuing
operations of $14,608,000 (2012: $15,003,000) and a profit from continuing operations after taxation of $2,366,000
(2012: $5,009,000) and an overall net profit after tax of $668,000 (2012: $3,035,000). The reduction in revenue
primarily resulted from the reduced number of stores and the new Evolution store refit at one store. Like for like sales
growth has been achieved across the Bedshed stores network although there has been some minor margin pressure
from a lower Australian dollar and increased discounting in the market.
Profit was supported with revaluation of the investment property at Moorebank in NSW. Further valuation increases are
expected from the expiration of subsidised rental period out to November 2015.
Closure of Company-owned stores
During the year ended 30 June 2013, the Consolidated Entity provided for the closure of one underperforming company
owned store and closed four previously announced company owned stores. These stores were in sub-optimal regional
locations with net present value of closure costs falling below expected operating losses for the remaining lease term.
Financial Position
At 30 June 2013 the Consolidated Entity had equity of $22,133,000 (2012: $21,918,000); cash and cash equivalents of
$3,439,000 (2012: $3,774,000) and unutilised debt facilities of $622,000 (2012: $640,000) (refer to note 4 for further
details).
Bank Facility
The Board is pleased to advise that the Consolidated Entity has successfully extended its longer term debt funding
facility with St George Bank from March 2014 to 30 July 2015. This outcome is indicative of St George Bank’s
understanding and support of the Consolidated Entity’s strategy. A $1.6m facility which is subject to annual review was
also extended.
Joyce Corporation Ltd 2013 Annual Report I PAGE 7
DIRECTORS’ REPORT (CONTINUED)
REVIEW AND RESULTS OF OPERATIONS (CONTINUED)
FUTURE DEVELOPMENTS, PROSPECTS AND BUSINESS STRATEGIES
The Consolidated Entity will look to further develop the Bedshed business through the expansion of its network of
franchised stores whilst seeking to improve the financial performance of Company-owned and operated stores. The
Board is completing a strategic review of all businesses to ensure maximum return on shareholders’ funds and during
the year invested in convertible notes that can be converted to a majority equity stake in KWB Pty Ltd a kitchen and
wardrobe sales and installation company based in Queensland and South Australia and New South Wales.
DIVIDENDS
Dividends declared or paid during the financial year are as follows:
Distributions paid or payable
Final unfranked ordinary dividend of Nil (2011 : 2.0 cents) cents per
share (Paid – 18 November 2011)
Interim unfranked ordinary dividend of 1.5 (2011: Nil) cents per share
(Paid – 02 July 2012)
Final unfranked ordinary dividend of 0.65 (2011 : Nil) cents per share
(Paid – 28 February 2013)
Prior year dividends paid on partly paid shares (Paid – 30 June 2013)
Interim unfranked ordinary dividend of 1.0 (2011: Nil) cents per share
(Paid – 23 July 2013)
2013
$000
2012
$000
-
414
179
31
280
904
406
414
-
-
-
820
The Board will continue to review the Company’s ability to pay dividends and expects to proceed with the payments of
regular dividends as soon as certain financial milestones are achieved.
SIGNIFICANT CHANGES IN STATE OF AFFAIRS
The Company invested $900,000 by way of convertible notes in KWB Pty Ltd. The notes can be converted into equity to
own 57% of the Kitchen and Wardrobe sales and installation company which operates as Kitchen Connection and
Wallspan in Queensland and South Australia and New South Wales. The Convertible Notes can be converted within 12
months of issue up to February 2014. The Company has assisted with business strategy and management and is
developing a sustainable profit model to allow the Convertible Notes to be exercised. Should the Convertible notes not
be exercised than the investment is redeemable and is secured by a registered charge over the assets of KWB Pty Ltd.
SIGNIFICANT AFTER REPORTING DATE EVENTS
After the reporting date, agreement on closing one regional company owned store has been executed. This was
fully provisioned at the reporting date.
An unfranked dividend of 1.0 cents per share was paid on 23 July 2013.
Other than disclosed above no event has occurred since the reporting date to the date of this report that has
significantly affected, or may significantly affect:
(a)
(b)
(c)
the Consolidated Entity’s operations, or
the results of those operations, or
the Consolidated Entity’s state of affairs.
Joyce Corporation Ltd 2013 Annual Report I PAGE 8
DIRECTORS’ REPORT (CONTINUED)
INFORMATION ON DIRECTORS
Mr D A Smetana Chairman - Non-executive. Age 69.
Dip Comm FCPA FAIM FAICD
Experience and expertise
Mr Smetana has been Chairman of Joyce Corporation Ltd since 1984. He is also the Chairman of Bedshed Franchising
Pty Ltd. He is a past President of the Industrial Foundation for Accident Prevention and remains a Director. Director of
Edge Employment Solutions Inc, Director of Poly Metallica Minerals Ltd, a Director of St John of God Foundation and
Chairman of the St John of God Comprehensive Cancer Centre Fundraising Committee.
His past board memberships include: Deputy Chairman of Youth Focus Inc (1998 - 2007), Deputy Chairman Western
Power Corporation and Chairman of its Finance Committee until 2003, Chairman and National Councillor of the
Defence Reserves Support Council - WA (1997 - 2006), Director of WA Symphony Orchestra until 2003. Vice President
and Councillor of the WA Federation of Police and Community Youth Centres (Inc.),
His awards include the 2003 Centenary Medal for Service to Commerce and the Community, the 2007 Ian Chisholm
Award for Distinguished Service to Occupational Health & Safety and the 1998 WA Business Executive of the Year
award.
Other current Directorships of listed companies
None
Former Directorships of listed companies in last 3 years
None
Special responsibilities
Chairman of the Board
Interests in shares and options
-
-
9,850,696 beneficial fully paid ordinary shares in Joyce Corporation Ltd.
380,000 partly paid (issued at $1.955 and paid to $1.315) ordinary shares in Joyce Corporation Ltd.
Mr M A Gurry. – Independent, Non-executive Director. Age 66.
Bachelor of Science Dip AICD FAICD FAIM SF Fin
Experience and expertise
Mr Gurry was Managing Director of HBF from 1995 to 2007 and prior to that he was President Asia Pacific of the DMR
Group Ltd, an international consulting firm. From 1996 to 1999 he was Vice President of the Asian Association of
Management Organizations, from 1997 to 1999 National President of the Australian Institute of Management and from
1999 to 2008 Chairman of United Way WA Inc. Mr Gurry is former Chairman of Foundation Housing Limited, Chairman
of the Forest Products Commission, and former Chairman of Reignite Pty Ltd, a councilor of HBF Ltd and has served on
numerous Boards including the Australian Health Insurance Association, The Australian Information Industry
Association, The West Australian Ballet and Integrated Group Ltd.
Other current Directorships of listed companies
None
Former Directorships of listed companies in last 3 years
None
Special responsibilities
Chairman of the Audit Committee
Member of the Remuneration Committee
Interests in shares and options
None
Joyce Corporation Ltd 2013 Annual Report I PAGE 9
DIRECTORS’ REPORT (CONTINUED)
INFORMATION ON DIRECTORS (CONTINUED)
Mr T R Hantke. – Independent, Non-executive Director. Age 65.
Bachelor of Commerce, FAIM, FAICD
Experience and expertise
Mr Hantke is Managing Director of his own consulting practice, Franchising Solutions Pty Ltd. Prior to this he
was the CEO of Snap Franchising from 1988 - 2001. He has been a Director of Bedshed Franchising Pty Ltd
since February 2002 and was appointed to the Joyce Board in June 2006. He was a board member of the
Franchise Council of Australia 1989 - 1996; Member of the Franchise Policy Council 1997 - 2002; is currently a
Member of the ACCC's Franchise Consultative Committee; and Chairman of Co-operative Purchasing Services
Pty Ltd. and an Alternate Non Executive Director of Mrs. Macs Pty Ltd. Mr Hantke has extensive managerial
experience in both small and large organizations and in various industries.
Other current Directorships of listed companies
None
Former Directorships of listed companies in last 3 years
None
Special responsibilities
Chairman of the Remuneration Committee
Member of the Audit Committee
Interests in shares and options
None
Mr A Mankarios. – Executive Director Age 46.
MBA, FAICD, CFTP
An Executive Director of Joyce Corporation Limited (JYC), Anthony is an experienced director and manager who has
played a key role in Joyce's underlying business growth performance since 2010. He is also a non-executive director of
KWB Group Pty Ltd, which is a fast growing Kitchen Connection and Wallspan business; and Chairman of Man
Investments and Consultants as well as being involved in a number of other private companies.
Anthony is currently a Non- Executive Director of Inventis Limited (IVT) and was the CEO of Oldfields Holdings Ltd
His experience over the last 26 years spans a number of different sectors ranging from retail, wholesale and
distribution, manufacturing as well as furniture retail / Importing and Franchise businesses in Australia and in Asia.
Other current Directorships of listed companies
Inventis Limited
Former Directorships of listed companies in last 3 years
None
Special responsibilities
Member of the Audit Committee and Remuneration Committee.
Interests in shares and options
697,286
COMPANY SECRETARY
The Company Secretary is Mr K Gray.
Mr Gray was appointed to the position of Chief Financial Officer and Company Secretary on 19 January 2010. Mr Gray
holds a Bachelor of Economics and is a qualified CPA. An experienced Chief Financial Officer and Company Secretary
having acted in these roles with a number of listed companies in mining services, industrial and retail.
Joyce Corporation Ltd 2013 Annual Report I PAGE 10
DIRECTORS’ REPORT (CONTINUED)
MEETINGS OF DIRECTORS
The numbers of meetings of the Company’s Board of Directors and of each Board committee held during the year
ended 30 June 2013, and the numbers of meetings attended by each Director were:
Full meeting
of Directors
A
11
11
11
11
B
10
11
9
11
Meetings of committees
Audit
Remuneration
A
4
4
4
4
B
4
4
4
4
A
-
6
6
6
B
-
5
6
5
D A Smetana
M A Gurry
T R Hantke
A Mankarios
A =
B =
Number of meetings attended
Number of meetings held during the time the Director held office or was a member of the committee during
the year
A Mankarios did not attend three meetings of the remuneration Committee as these meetings related to his contract
and remuneration.
REMUNERATION AND DIVERSITY REPORT - AUDITED
The remuneration report is set out under the following main headings:
A. Principles used to determine the nature and amount of remuneration.
B. Service agreements
C. Details of remuneration
D. Share-based compensation
E. Link between remuneration policy and Company performance
The information provided in this remuneration report is also included in the financial report which has been audited as
required by section 308(3C) of the Corporations Act 2001.
A. Principles used to determine the nature and amount of remuneration
Remuneration Committee
The Remuneration Committee Charter establishes the role of the Remuneration Committee which is to review and
make recommendations on Board and Executive Director remuneration: senior management remuneration; executive
share plan participation; human resource and remuneration policies; and senior management succession planning,
appointments and terminations.
The main responsibilities of the Remuneration Committee includes reviewing and making recommendations on
remuneration policies for the company including, in particular, those governing the directors, Executive Director and
senior management.
The Remuneration Committee comprises a majority of non-executive directors and at least three members. The
Chairman of the committee is appointed by the Board and must be a non-executive director.
The Remuneration Committee is required to meet as and when required by the Chairman. The committee may invite
persons deemed appropriate to attend meetings and may take such independent advice as it considers appropriate.
Any committee member may request the Chairman call a meeting.
Joyce Corporation Ltd 2013 Annual Report I PAGE 11
DIRECTORS’ REPORT (CONTINUED)
REMUNERATION AND DIVERSITY REPORT – AUDITED (CONTINUED)
The Remuneration Committee is required to assess its effectiveness periodically. In addition the Charter is required to
be revised annually and updated as required.
Remuneration Policies
The objective of the Consolidated Entity’s executive reward framework is to ensure reward for performance is
competitive and appropriate for the results delivered. The framework aligns executive reward with achievement of
strategic objectives and the creation of value for shareholders, and conforms to market practice for delivery of reward.
The Board ensures that executive reward satisfies the following key criteria for good reward governance practices:
(cid:120) competitiveness and reasonableness;
(cid:120) acceptability to shareholders;
(cid:120) performance linkage / alignment of executive compensation;
(cid:120) transparency; and
(cid:120) capital management.
In consultation with external remuneration consultants, where appropriate, the Consolidated Entity has structured an
executive remuneration framework that is market competitive and complementary to the reward strategy of the
organisation.
A. Principles used to determine the nature and amount of remuneration (continued)
Alignment to shareholders’ interests:
(cid:120) has economic profit as a core component of plan design;
(cid:120) focuses on sustained growth in shareholder wealth, consisting of dividends and growth in share price,
and delivering constant return on assets as well as focusing the executive on key non-financial drivers
of value; and
(cid:120) attracts and retains high calibre executives.
Alignment to program participants’ interests:
(cid:120) rewards capability and experience;
(cid:120) reflects competitive reward for contribution to growth in shareholder wealth;
(cid:120) provides a clear structure for earning rewards; and
(cid:120) provides recognition for contribution.
Non-executive Directors
Fees and payments to non-executive Directors reflect the demands which are made on, and the responsibilities of, the
Directors. Non-executive Directors’ fees and payments are reviewed annually by the Board. The Board considers,
where appropriate, the advice of independent remuneration consultants to ensure non-executive Directors’ fees and
payments are appropriate and in line with the market. The Chairman’s fees are determined independently to the fees of
non-executive Directors based on comparative roles in the external market. The Chairman is not present at any
discussions relating to determination of his own remuneration.
The current base remuneration was last reviewed with effect from 30 June 2011. The Chairman's remuneration is
inclusive of committee fees and other non-executive Directors who are members of a committee do not receive
additional yearly fees.
Non-executive Directors’ fees are determined within an aggregate Directors’ fee pool limit, which is periodically
recommended for approval by shareholders. The maximum currently stands at $500,000 per annum and was approved
by shareholders at the Annual General Meeting on 22 November 2012.
Joyce Corporation Ltd 2013 Annual Report I PAGE 12
DIRECTORS’ REPORT (CONTINUED)
REMUNERATION AND DIVERSITY REPORT - AUDITED (CONTINUED)
Executive pay
Fixed Remuneration
The level of fixed remuneration is set so as to provide a base level of remuneration which is both appropriate to the
position and is competitive in the market. Fixed remuneration is reviewed annually by the Remuneration Committee and
the process involves the review of Consolidated Entity and individual performance, and relevant comparative
remuneration in the market.
Variable Remuneration - Short Term Incentives
The goals consist of a number of key performance indicators (KPI's) covering both financial and non-financial, corporate
and individual measures of performance. Included in the measures are contributions to net profit before tax, cash
targets and departmental functional KPI's. At the end of the financial year the remuneration committee assesses the
actual performance of the Consolidated Entity, the relevant segment and individual against the KPIs set at the
beginning of the financial year. Should the Consolidated Entity, or the relevant segment, achieve the set KPIs, the
Board will reward the key management personnel with a bonus during the salary review. A percentage of a pre-
determined maximum amount is awarded depending on results. No bonus is awarded where performance falls below
the minimum.
B. Service Agreements
This remuneration report outlines the director and executive remuneration arrangements of the Group in accordance
with the requirements of the Corporations Act 2001 and its Regulations.
For the purposes of this report, Key Management Personnel (“KMP”) of the Consolidated Entity are defined as those
persons having authority and responsibility for planning, directing and controlling the major activities of the Consolidated
Entity, directly or indirectly, including any Director (whether executive or otherwise) of the Company.
For the purposes of this report, the term "executive" encompasses the Executive Director, Senior Executives and
Company Secretary of the Consolidated Entity.
Details of key management personnel (including the Senior Executives of the Consolidated Entity):
Mr D A Smetana
Mr M A Gurry
Mr T R Hantke
Mr A Mankarios
Director and Chairman
Director - Chairman of Audit Committee
Director - Chairman of Remuneration Committee
Executive Director
Mr G Culmsee
Mr K Gray
Chief Operating Officer
Chief Financial Officer & Company Secretary
The employment conditions of all Key Management Personnel are formalised in contracts of employment. Other than
the Non-Executive Directors, the Executive Director and the CFO, who were engaged by Joyce Corporation Ltd all
other executives are permanent employees of Bedshed Franchising Pty Ltd.
The Executive Director has a service contract which at the date of this report completes at 31 December 2013. This is a
part time role which allows an hourly charge for work undertaken and paid monthly. All out of pocket expenses in
connection with carrying out the role are reimbursable.
Joyce Corporation Ltd 2013 Annual Report I PAGE 13
DIRECTORS’ REPORT (CONTINUED)
REMUNERATION AND DIVERSITY REPORT – AUDITED (CONTINUED)
Other Executives
All executives have rolling contracts. The Consolidated Entity can terminate each contract by providing from two
months to six months written notice or providing payment in lieu of the notice period (based on the fixed component of
the executives’ remuneration). The Consolidated Entity may terminate an executive for serious misconduct without
notice. Where termination with cause occurs the executive is only entitled to that portion of remuneration that is fixed up
to the date of termination.
C. Details of remuneration
Short-term
Post-Employment
Total
Share
based
payment
%
relating
to
performa
nce
Superannu
ation
$000
Retirement
benefits
$000
Options
$000
Non-
Monetar
y
benefits
$000
-
-
-
-
-
22,550
Cash
Bonus
$000
-
-
-
45,000
-
-
Salary &
Fees
$000
153,125
56,167
43,715
136,143
214,339
152,224
30 June 2013
Mr D A Smetana
Mr T R Hantke
Mr M A Gurry
Mr A Mankarios1
Mr G Culmsee
Mr K Gray
25,000
15,083
27,535
-
19,290
15,729
Total Remuneration:
755,713
45,000
22,550
102,637
30 June 2012
Mr D A Smetana
Mr T R Hantke
Mr M A Gurry
Mr A Mankarios
Mr G Culmsee
Mr K Gray
Ms S Freedman 2
121,875
44,222
-
155,106
211,290
137,600
142,744
-
-
-
65,000
40,000
32,000
13,479
-
-
-
-
-
28,000
-
50,000
24,528
68,750
-
22,230
17,784
14,060
Total Remuneration:
812,837
150,479
28,000
197,352
$000
178,125
71,250
71,250
181,143
233,629
190,503
-
-
-
24.86%
-
-
925,900
24.86%
171,875
68,750
68,750
220,106
273,520
215,384
170,283
-
-
-
29.54%
14.65%
14.88%
7.65%
1,188,668
12.63%
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
1 Mr A Mankarios was paid a cash bonus based on key performance criteria which requires performance
meets or exceeds the group budget and also achieves successful completion of predetermined events.
He is contracted to 31 December 2013.
2 Ms S Freedman was no longer considered a KMP in the 2013 in the Financial Year.
Less bonuses were paid in the current year due to changes in bonus criteria requiring achievement of
full budget to achieve bonuses based on key performance indicators.
D. Share-based compensation
There was no share-based compensation of Key Management Personnel during the year ended 30 June 2013 (2012:
Nil).
Joyce Corporation Ltd 2013 Annual Report I PAGE 14
DIRECTORS’ REPORT (CONTINUED)
REMUNERATION AND DIVERSITY REPORT – AUDITED (CONTINUED)
E. Link between remuneration policy and Company performance
The Consolidated Entity provided executives with variable remuneration in the form of short-term incentives as
described in Part A of the Remuneration Report. These incentives are payable upon the achievement of certain goals
covering both financial and non-financial, corporate and individual measures of performance. Included in the measures
are contributions to net profit before tax, cash targets and departmental functional KPI's.
The following table shows the gross revenue, profits and dividends for the last five years for the Consolidated Entity, as
well as the share price at the end of the respective financial years.
Revenue (a)
Net Profit (a)
Share Price at Year-end $
Dividends (Cents) Paid
2013
$000
18,921
668
0.40
2.15
2012
$000
19,956
3,035
0.42
2.00
2011
$000
24,441
2,914
0.45
2.00
2010
$000
28,089
(8,147)
0.40
2.00
2009
$000
27,906
(1,329)
0.41
4.50
(a) Revenue and net profit in respect of the 2013 and 2012 financial years include discontinued operations. The 2012
financial performance has been impacted by a non-recurring provision for stores that are to be closed during the
financial year ending 30 June 2013.
F. Voting at the 2012 Annual General Meeting on the Remuneration report
The Remuneration report in the 2012 Annual Report to shareholders was approved by 99.9% of shareholders at the
2012 Annual General Meeting. No specific feedback was received at the Annual General Meeting or throughout the
year.
G. Independent Salary and Incentive Review
During the year the company undertook an independent salary and incentive review so as to benchmark
existing salary and incentive policies and levels. The Review was undertaken by the independent
professional firm of Gerard Daniels Australia. In general the company policies and remuneration levels
were found to be consistent with the markets in which we operate, although some changes have been
made to ensure greater consistency in some aspects of our remuneration practices. Total fees charged
for this service was $16,000 + GST. During the financial year ended 30 June 2012 the Company did
not engage any remuneration consultants.
(cid:120) Gerard Daniels was engaged by, and reported directly to, the chair of the remuneration
committee. The agreement for the provision of remuneration consulting services was executed
by the chair of the remuneration committee under delegated authority on behalf of the board.
(cid:120) The report containing the remuneration recommendations was provided by Gerard Daniels
directly to the chair of the remuneration committee; and
(cid:120) Gerard Daniels was permitted to speak to management throughout the engagement to
understand company processes, practices and other business issues and obtain management
perspectives. However, Gerard Daniels was not permitted to provide any member of
management with a copy of their draft or final report that contained the remuneration
recommendations.
As a consequence, the board is satisfied that the recommendations were made free from undue
influence from any members of the key management personnel.
End of Audited Remuneration Report.
LOANS TO DIRECTORS AND EXECUTIVES
There were no loans outstanding to Directors and executives as at 30 June 2013.
Joyce Corporation Ltd 2013 Annual Report I PAGE 15
DIRECTORS’ REPORT (CONTINUED)
INSURANCE OF OFFICERS
During the financial year, Joyce Corporation Ltd paid a premium to insure the Directors and secretaries of the Company
and its Australian-based controlled entities, and senior executives of the Consolidated Entity. A clause in the relevant
insurance policy prevents the disclosure of the amount of the premium.
The liabilities insured are legal costs that may be incurred in defending civil or criminal proceedings that may be brought
against the officers in their capacity as officers of entities in the Consolidated Entity, and any other payments arising
from liabilities incurred by the officers in connection with such proceedings. This does not include such liabilities that
arise from conduct involving a willful breach of duty by the officers or the improper use by the officers of their position or
of information to gain advantage for themselves or someone else or to cause detriment to the Company. It is not
possible to apportion the premium between amounts relating to the insurance against legal costs and those relating to
other liabilities.
DIVERSITY
The Board recocnises its talented and diverse workforce as akey competitive advantage and is
responsible for the Diversity Policy and maintains oversight to ensure its objectives are met, with
assistance from management.
The Company understands and recognises the value in having a diverse workforce from which to draw
on. The Company is committed to treating all of its staff equally irrespective of their gender, race, age,
ethnicity, sexual orientation, disability or any other irrelevant difference; having in place a corporate
culture where all staff feel equally welcome and are not discriminating in the employment of staff
(including the appointment of Directors) based on a potential candidate’s gender, race, age, ethnicity,
sexual orientation, disability or any other irrelevant difference.
The Company’s objectives in relation to diversity are:
1) To recruit from a diverse range of people based on merit.
2) To ensure all employees have equal access to opportunities in the workplace.
3) To ensure there is equal pay for equal work.
4) To continue to build an environment that is accepting of a diverse range of backgrounds and views.
Joyce Corporation Ltd is committed to ensuring that any Board appointments are made without
discriminating against a potential candidate based on gender, race, age, ethnicity, sexual orientation,
disability or any other irrelevant difference.
As at 30 June 2013 the company employs 40 women representing 51% of the workforce. There are no
female Board members and there is one female in a senior position representing 20% of senior
managers.
To promote diversity the following policies have been developed:
Carers leave available for all employees
Part time opportunities
Monitoring remuneration for gender differences
Enhanced flexible work practices
Further policies have been targeted:
Inclusion of diversity in induction and management development programmes
Implementation of parental and maternity leave opportunities
A copy of the Diversity policy is available on the Joyce Corporation Ltd website at www.joycecorp.com.au(cid:1648) under
corporate governance.
Joyce Corporation Ltd 2013 Annual Report I PAGE 16
DIRECTORS’ REPORT (CONTINUED)
PROCEEDINGS ON BEHALF OF THE COMPANY
No person has applied to the Court under section 237 of the Corporations Act 2001 for leave to bring proceedings on
behalf of the Company, or to intervene in any proceedings to which the Company is a party, for the purpose of taking
responsibility on behalf of the Company for all or part of those proceedings.
No proceedings have been brought or intervened in on behalf of the Company with leave of the Court under section 237
of the Corporations Act 2001.
PERFORMANCE IN RELATION TO ENVIRONMENTAL REGULATION
Joyce Corporation holds licences issued by the Environmental Protection Authority and various other authorities
throughout Australia. These licences regulate the management of air and water quality, the storage and carriage of
hazardous materials and disposal of wastes associated with the Consolidated Entity’s properties. There have been no
material known breaches associated with the Consolidated Entity’s licence conditions.
NON-AUDIT SERVICES
The Board of Directors, in accordance with advice from the audit committee, is satisfied that the provision of non-audit
services during the year is compatible with the general standard of independence for auditors imposed by the
Corporations Act 2001. The Directors are satisfied that the services disclosed below did not compromise the external
auditor’s independence for the following reasons:
(cid:120) all non-audit services are reviewed and approved by the audit committee prior to commencement to ensure they
(cid:120)
do not adversely affect the integrity and objectivity of the auditor; and
the nature of the services provided does not compromise the general principles relating to auditor independence in
accordance with APES 110: Code of Ethics for Professional Accountants set by the Accounting Professional
Ethical Standards Board.
The following fees for non-audit services were paid / payable to the external auditors during the year ended 30 June
2013:
Taxation services
Other assurance-related services
$
-
-
-
Joyce Corporation Ltd 2013 Annual Report I PAGE 17
DIRECTORS’ REPORT (CONTINUED)
AUDITOR'S INDEPENDENCE DECLARATION
A copy of the auditor's independence declaration as required under section 307C of the Corporations Act 2001 is set
out on page 19.
Signed in accordance with a resolution of the Directors made pursuant to s.298(2) of the Corporations Act 2001.
D A Smetana
Chairman
Perth, 27 September 2013
Joyce Corporation Ltd 2013 Annual Report I PAGE 18
Tel: +8 6382 4600
Fax: +8 6382 4601
www.bdo.com.au
38 Station Street
Subiaco, WA 6008
PO Box 700 West Perth WA 6872
Australia
DECLARATION OF INDEPENDENCE BY GLYN O’BRIEN TO THE DIRECTORS OF JOYCE CORPORATION
LIMITED
As lead auditor of Joyce Corporation Limited for the year ended 30 June 2013, I declare that, to the
best of my knowledge and belief, there have been no contraventions of:
(cid:127)
(cid:127)
the auditor independence requirements of the Corporations Act 2001 in relation to the audit; and
any applicable code of professional conduct in relation to the audit.
This declaration is in respect of Joyce Corporation Limited and the entities it controlled during the
period.
Glyn O’Brien
Director
BDO Audit (WA) Pty Ltd
Perth, 27 September 2013
BDO Audit (WA) Pty Ltd ABN 79 112 284 787 is a member of a national association of independent entities which are all members of BDO (Australia) Ltd ABN 77 050
110 275, an Australian company limited by guarantee. BDO Audit (WA) Pty Ltd and BDO (Australia) Ltd are members of BDO International Ltd, a UK company limited
by guarantee, and form part of the international BDO network of independent member firms. Liability limited by a scheme approved under Professional Standards
Legislation (other than for the acts or omissions of financial services licensees) in each State or Territory other than Tasmania.
CORPORATE GOVERNANCE STATEMENT
The Board of Directors of Joyce Corporation Ltd (“the Company”) is responsible for the corporate
governance of the Company. The Board monitors the business affairs of the Company on behalf of the
shareholders by whom they are elected and to whom they are accountable.
The Company has made it a priority to adopt systems of control and accountability as the basis for the
administration of corporate governance. Some of these policies and procedures are summarised in this
statement. Commensurate with the spirit of the August 2007 ASX Corporate Governance Council's
Corporate Governance Principles and Recommendations ("Principles & Recommendations"), the Company
has followed each recommendation where the Board has considered the recommendation to be an
appropriate benchmark for its corporate governance practices. Where the Company's corporate governance
practices follow a recommendation, the Board has made appropriate statements reporting on the adoption of
the recommendation. Where, after due consideration, the Company's corporate governance practices depart
from a recommendation, the Board has offered full disclosure and reason for the adoption of its own practice.
Further information about the Company's charters, policies and procedures may be found at the Company's
website at www.joycecorp.com.au, under the section marked Governance.
The Company has not established (and therefore has not made publicly available) a formal Nomination
Committee Charter, Policy and Procedure for Selection and (Re) Appointment of Directors, or Procedure for
Selection, Appointment and Rotation of External Auditor. Where applicable, the Company's "If Not, Why Not"
disclosure for each of the Recommendations to which this charter and the policies and procedures relate, is
provided below.
Disclosure – Principles & Recommendations
The Company reports below on how it has followed (or otherwise departed from) each of the Principles &
Recommendations during the year ended 30 June 2013 ("Reporting Period").
Principle 1: Lay Solid Foundation for Management and Oversight
Recommendation 1.1:
Companies should establish the functions reserved to the Board and those delegated to senior executives
and disclose those functions.
Disclosure:
The Board and senior management of the Company are committed to acting responsibly, ethically and with
high standards of integrity as the Company strives to create shareholder value. The Board accepts
responsibility for the overall corporate governance of the Company and has consequently developed and
adopted corporate governance practices and policies that have been implemented throughout management
and governance.
The Company has established the functions reserved to the Board and is in the process of formalising these
functions in a Board Charter. The Board's primary role is the optimisation of Company performance and
protection and enhancement of shareholder value. Its functions and responsibilities includes setting strategic
and policy direction, monitoring performance against strategy, identifying principal risks and opportunities
and ensuring risk management systems are established and reviewed, approving and monitoring financial
reports, capital management, compliance, significant business transactions and investments, appointing
senior management and monitoring performance, remuneration, development and succession, adopting
procedures to ensure the business of the Company is consistent with Company values, continuous
disclosure compliance, ensuring effective shareholder communication, ensuring the Board remains
appropriately skilled, reviewing and approving corporate governance systems and enhancing and protecting
the Company's reputation.
The Board is also governed by the Company's constitution, and on appointment each Director is provided
with a formal letter of appointment setting out key terms and conditions of the appointment their duties and
responsibilities, the role of the Board and committees, the Company's constitution and the Company's
policies.
Joyce Corporation Ltd 2013 Annual Report I PAGE 20
CORPORATE GOVERNANCE STATEMENT (CONTINUED)
Principle 1: Lay Solid Foundation for Management and Oversight (continued)
The Company has established the functions delegated to senior executives and will set out these functions in
its Board Charter. Senior executives are responsible for supporting the Executive Director and assisting the
Executive Director in implementing the running of the general operations and financial business of the
Company, in accordance with the delegated authority of the Board.
Recommendation 1.2:
Companies should disclose the process for evaluating the performance of senior executives.
Disclosure:
Evaluation of the Executive Director is carried out by the Remuneration Committee each year together with
the ongoing monitoring of management and Company performance, with informal discussions undertaken as
required. The Executive Director conducts a formal review each year assessing the performance of Senior
Executives and reports back to the Board.
Recommendation 1.3:
Companies should provide the information indicated in the “Guide to reporting on Principle 1.”
Disclosure:
The Remuneration Committee conducted an evaluation of the Executive Director in June 2013. The
remuneration committee conducted an evaluation of Senior Executives in June 2013. The performance
evaluation was undertaken in accordance with the process disclosed above.
Principle 2: Structure the Board to add value
Recommendation 2.1:
A majority of the Board should be independent Directors.
Disclosure:
The Board is currently comprised of four Directors with three being non-executive Directors, including the
Chairman and one executive Director. The Company does not comply with this recommendation, as two of
the four Directors are considered independent.
The independent Directors of the Company are:
(cid:127)
(cid:127)
Mr M Gurry (Non-Executive Director and Chairman of the Audit Committee)
Mr T Hantke (Non-Executive Director and Chairman of the Remuneration Committee)
The Board regularly assesses the independence of each Director with the intention to have a majority of
Directors being independent. Each Director is required to provide to the Board all relevant information to
assist the Board in this regard.
The Board will continue to monitor developments and consider any guidelines that may be issued with
respect to the maximum tenure of Directors in order to meet ‘independence’ guidelines.
Joyce Corporation Ltd 2013 Annual Report I PAGE 21
CORPORATE GOVERNANCE STATEMENT (CONTINUED)
Principle 2: Structure the Board to add value (continued)
Recommendation 2.2:
The Chair should be an independent Director.
Disclosure:
The Chairman is not considered independent due to the size of the shareholding in his control.
Explanation for Departure:
The Board has decided to continue with Mr D Smetana as Chairman in recognition of his considerable
experience with the Company and expertise that compliments the skills and experience of the other Board
members. The Company deals with the lack of independence of the Chairman by ensuring that conflicts of
interest are adequately disclosed and the Chairman abstains from voting on matters where they have, or it is
perceived they have, a beneficial interest in the outcome of the matters.
Recommendation 2.3:
The roles of the Chair and Managing Director should not be exercised by the same individual.
Disclosure:
The Executive Director (Anthony Mankarios) has taken over all operational and corporate supervision
responsibility.
Recommendation 2.4:
The Board should establish a Nomination Committee.
Disclosure:
The Company has not established a separate Nomination Committee.
Explanation for Departure:
The Board considers the present Directors are able to discharge the responsibilities of a Director, having
regards to the law and the highest standards of governance. Should a vacancy exist, for whatever reason, or
where considered that the Board would benefit from the services of a new Director, the Board will select
appropriate candidates with relevant qualifications, skills and experience. The Board has not established a
separate Nomination Committee as, due to the Company's size, the simplicity of its operations, the Board's
size and the cost effectiveness of the Board's current operations, the Board considers such a separate
Nomination Committee is not warranted or commercially viable and its functions and responsibilities can be
adequately and efficiently discharged by the Board as a whole. The Board assesses the experience,
knowledge and expertise of potential Directors before any appointment is made.
Items that are usually required to be discussed by a Nomination Committee are marked as separate agenda
items at Board meetings when required. The Board deals with any conflicts of interest that may occur when
convening in the capacity of Nomination Committee by ensuring the Director with conflicting interests is not
party to the relevant discussions.
Recommendation 2.5:
Companies should disclose the process for evaluating the performance of the Board, its committees and
individual Directors.
Disclosure:
The Company has adopted self-evaluation processes to measure Board performance. The performance of
all Directors is assessed through analysis and review by, and discussion with, the Chair on issues relating to
individual Directors' attendance at and involvement in Board meetings, interaction with management,
performance of allocated tasks and any other matters identified by the Chair or other Directors. Evaluation of
any Board committees is conducted on a similar basis. Due to the Board's assessment of the effectiveness
of these processes, the Board has not formalised qualitative performance indicators to measure individual
Director’s performance.
Joyce Corporation Ltd 2013 Annual Report I PAGE 22
CORPORATE GOVERNANCE STATEMENT (CONTINUED)
Principle 2: Structure the Board to add value (continued)
Recommendation 2.6:
Companies should provide the information indicated in the “Guide to reporting on Principle 2.”
Disclosure:
Skills, Experience, Expertise and Term of Office of each Director
The composition of the Board has been determined on the basis of providing the Company with the benefit of
a broad range of commercial, administrative and financial skills, combined with an appropriate level of
experience at a senior corporate level. The names and further information regarding the skills, experience,
qualifications, relevant expertise and term of office of the Directors are set out in the most recent Directors’
Report.
Board Access to Information and Independent Advice
All Directors have access to employees and, subject to the law, access to all Company records and
information held by employees and external advisers. The Board receives regular detailed financial and
operational reports from senior management to enable it to carry out its duties.
Consistent with ASX Principle 2, the Company allows each Director to seek individual external advice at the
expense of the Company.
Committees of the Board
The Board has established an Audit Committee and a Remuneration Committee to assist the Board in the
discharge of its responsibilities.
Further information about the Audit Committee is provided in the statement under Principal 4: Safeguard
Integrity in Financial Reporting.
Further information about the Remuneration Committee is provided in the statement under Principal 8:
Remunerate Fairly and Responsibility.
Identification of Independent Directors
The policy on Director Independence defines an independent Director as a non-executive Director (not a
member of management) and free of any business or other relationship that could materially interfere with, or
could reasonably be perceived to materially interfere with the independent exercise of their judgment.
In determining the independent status of a Director the Board considers whether the Director:
(cid:127)
(cid:127)
(cid:127)
(cid:127)
(cid:127)
is a substantial shareholder of the Company or an officer of, or otherwise associated directly or
indirectly with, a substantial shareholder the Company;
is employed, or has previously been employed in an executive capacity by the Company or another
group member, and there has not been a period of at least three years between ceasing such
employment and serving on the Board;
has within the last three years been a principal of a material professional adviser or a material
consultant to the Company, or another group member, or an employee materially associated with the
service provider;
is a material supplier or customer of the Company, or another group member, or an officer of or
otherwise associated directly or indirectly with a material supplier or customer;
has a material contractual relationship with the Company or another group member, other than as a
Director of the Company.
Materiality for these purposes is determined on both a quantitative and qualitative bases. An amount of over
5% of annual turnover or 5% of the individual Director’s net assets is considered material for these purposes.
Joyce Corporation Ltd 2013 Annual Report I PAGE 23
CORPORATE GOVERNANCE STATEMENT (CONTINUED)
Principle 2: Structure the Board to add value (continued)
Nomination Matters
The full Board carries out the role of the Nomination Committee. The full Board did not officially convene as a
Nomination Committee during the Reporting Period; however the Board discusses nominated-related
matters from time to time during the year as required. The explanation for departure set out under
Recommendation 2.4 above explains how the functions of the Nomination Committee are performed.
Performance Evaluation
During the Reporting Period no review or evaluation of the performance of the Board, individual Directors
and applicable Committees was undertaken in accordance with the process disclosed at Recommendation
2.5.
Selection and (Re)/Appointment of Directors
The Company has not established (and therefore has not made publicly available) a formal Policy and
Procedure for Selection and (Re)/Appointment of Directors.
In determining candidates for the Board, the Nomination Committee (or equivalent) considers the balance of
independent Directors on the Board as well as the skills and qualifications of potential candidates that will
best enhance the Board's effectiveness.
The Board recognizes that Board renewal is critical to performance and the impact of Board tenure on
succession planning. Under the Company's constitution, at every annual general meeting one third of the
Directors (except the Managing Director) must retire from office and are eligible for re-election at that
meeting. The Directors to retire must be those who have been longest in office since their last election and,
in any event, Directors cannot hold office for more than three years without submitting themselves for re-
election. Re-appointment of Directors is not automatic.
Principle 3: Promote Ethical and Responsible Decision Making
Recommendation 3.1:
Companies should establish a Code of Conduct and disclose the code or a summary of the code as to the
practices necessary to maintain confidence in the Company's integrity, the practices necessary to take into
account their legal obligations and the reasonable expectations of their stakeholders and the responsibility
and accountability of individuals for reporting and investigating reports of unethical practices.
Disclosure:
The Board has adopted a Code of Conduct for Directors to promote ethical and responsible decision making
by Directors. The Code is based on a code of conduct for Directors prepared by the Australian Institute of
Company Directors and embraces the values of honesty, integrity, enterprise, excellence, accountability,
justice, independence and equality of shareholder opportunity.
The principles of the Code are:
(cid:127)
(cid:127)
A Director must act honestly, in good faith and in the best interests of the Company as a whole.
A Director has a duty to use due care and diligence in fulfilling the functions of office and exercising
the powers attached to that office.
A Director must use the powers of office for a proper purpose, in the best interests of the Company
as a whole.
A Director must not take improper advantage of the position of Director.
A Director must not allow personal interests, or the interests of any associated person, to conflict
with the interests of the Company.
A Director has an obligation to be independent in judgment and actions and to take all reasonable
steps to be satisfied as to the soundness of all decisions taken by the Board.
Confidential information received by a Director in the course of the exercise of directional duties
remains the property of the Company and it is improper to disclose it, or allow it to be disclosed,
unless that disclosure has been authorised by the Company, or the person from whom the
information is provided, or is required by law.
A Director should not engage in conduct likely to bring discredit upon the Company.
(cid:127)
(cid:127)
(cid:127)
(cid:127)
(cid:127)
(cid:127)
Joyce Corporation Ltd 2013 Annual Report I PAGE 24
CORPORATE GOVERNANCE STATEMENT (CONTINUED)
Principle 3: Promote Ethical and Responsible Decision Making (continued)
(cid:127)
A Director has an obligation at all times, to comply with the spirit, as well as the letter of the law and
with the principles of the Code.
The Executive Director is responsible to the Board for the day-to-day management of the Company.
The Company has adopted a Code of Ethics and Conduct for all employees and Directors of the Company
which details policies, procedures and guidelines aimed at maintaining high ethical standards, corporate
behavior and accountability. The Directors of the Company are also obliged to comply with the Code of
Conduct for Directors.
Objective
The code of Ethics and Conduct confirms that the Company’s primary objective is to provide a satisfactory
return to shareholders. The Company aims to achieve this by:
(cid:127)
(cid:127)
(cid:127)
(cid:127)
(cid:127)
Satisfying the needs of the customers and Franchisees through the provision of goods and services
on a competitive and professional basis;
Providing a safe and fulfilling working environment for employees, rewarding good performance and
providing opportunities for advancement;
Conducting existing operations in an efficient manner and by seeking out opportunities for
expansion;
Responding to the attitudes and expectations of the communities in which the Company operates;
Acting with integrity and honesty in dealings both inside and outside the group.
Values
All employees are expected to:
(cid:127)
(cid:127)
(cid:127)
(cid:127)
(cid:127)
(cid:127)
(cid:127)
(cid:127)
(cid:127)
Respect the law and act in accordance with it;
Respect confidentiality and not misuse information, assets or facilities;
Value and maintain professionalism;
Avoid real or perceived conflicts of interest;
Act in the best interests of shareholders;
By their actions contribute to the Company’s reputation as a good corporate citizen which seeks the
respect of the communities and environments in which it operates;
Perform their duties in ways that minimise environmental impacts and maximise workplace safety;
Exercise fairness, courtesy, respect, consideration and sensitivity in all dealings within their
workplace and with Franchisees, customers, suppliers, and the public generally; and
Act with honesty, integrity, decency and responsibility at all times.
Under the Code of Ethics and Conduct, all employees are required to comply with the letter and spirit of all
applicable laws and regulations in performance of their duties and their dealings with fellow employees,
customers, Franchisees, suppliers and all third parties with whom they have contact in the performance of
their duties. In addition, all employees have a responsibility to adhere to the Code and ensure that no
breaches occur. An employee who breaches the Code may face disciplinary action.
If an employee suspects that a breach of the Code has occurred or will occur, he or she must report that
breach to the appropriate Company manager.
No employee will be disadvantaged or prejudiced if he or she reports in good faith a suspected breach. All
reports will be acted upon and kept confidential. In addition, the whistleblower provisions of the Corporations
Act 2001 provide specific protection to employees who report breaches or suspected breaches of
Corporations Legislation under certain circumstances.
Responsibility for the administration, implementation and periodic review of the Code of Ethics and Conduct
lies with the Company Secretary, in consultation with the Managing Director/Executive Director.
Joyce Corporation Ltd 2013 Annual Report I PAGE 25
CORPORATE GOVERNANCE STATEMENT (CONTINUED)
Principle 3: Promote Ethical and Responsible Decision Making (continued)
Recommendation 3.2:
Companies should establish a policy concerning trading in Company securities by Directors, senior
executives and employees, and disclose the policy or a summary of that policy.
Disclosure:
Apart from observing all legal requirements, it is the policy of the Board that all Directors and Senior
Executives advise the Board before dealing in Joyce Corporation Ltd shares. In order to encourage as active
a market as possible in Company shares Directors and Senior Executives are encouraged to trade in
Company shares except during periods when they are aware of material matters or activities which are not
yet known by the market in general. For example during the period from the finalisation of the annual and
half yearly results and their release, The Board will not authorise trading in Joyce Corporation Ltd shares by
Directors or Senior Executives if, in its opinion, that Director or Executive has knowledge of any fact that may
affect the share price. The Board also accepts responsibility for reviewing any transactions between the
Company and Directors or any interest associated with Directors, to ensure the structure and the terms of
the transaction is in compliance with the Corporations Act 2001 and is properly disclosed.
Recommendation 3.3:
Companies should provide the information indicated in the “Guide to reporting on Principle 3.”
Disclosure:
Please refer to the disclosure in Recommendation 3.1 and Recommendation 3.2 above for a summary of the
Code of Conduct and Trading Policy.
Principle 4: Safeguard Integrity in Financial Reporting
Recommendation 4.1:
The Board should establish an Audit Committee.
Disclosure:
The Company has established an Audit Committee.
Recommendation 4.2:
The Audit Committee should be structured so that it:
(cid:127)
(cid:127)
(cid:127)
(cid:127)
consists only of non-executive Directors
consists of a majority of independent Directors
is chaired by an independent Chair, who is not Chair of the Board
has at least three members.
Disclosure:
The Company considers that it complies with this requirement.
The Audit Committee comprises of:
(cid:127)
(cid:127)
(cid:127)
Mr M A Gurry (Chairman of the Audit Committee)
Mr T R Hantke
Mr D Smetana
Recommendation 4.3:
The Audit Committee should have a formal charter.
Disclosure:
The Company has adopted an Audit Committee Charter.
Joyce Corporation Ltd 2013 Annual Report I PAGE 26
CORPORATE GOVERNANCE STATEMENT (CONTINUED)
Principle 4: Safeguard Integrity in Financial Reporting (continued)
Recommendation 4.4:
Companies should provide the information indicated in the “Guide to reporting on Principle 4.”
Disclosure:
Details of each of Director's qualifications and attendance at the Audit Committee meetings are set out in the
Directors' Report. All Directors are financially literate and have an understanding of the industry in which the
Company operates.
Appointment of Auditor
The effectiveness, performance and independence of the external auditor are reviewed by the Audit
Committee. If it becomes necessary to replace the external auditors for performance or independence
reasons, the Audit Committee will formalise the procedure and policy for selecting a new external auditor.
Audit Committee
The Audit Committee monitors internal control policies and procedures designed to safeguard Company
assets and to maintain the integrity of financial reporting, which is consistent with ASX Principle 4. A copy of
the Audit Committee Charter is available on the Company’s website under Governance.
The Audit Committee has the following responsibilities as set out in its Charter:
(cid:127)
(cid:127)
(cid:127)
(cid:127)
(cid:127)
the main responsibilities include oversight and making recommendations on internal and external
reporting, the oversight of risk management activities, and external audit; as well as communication
between the external auditors and the Board
the Audit Committee will comprise only non-executive Directors and at least three members. The
Chairman of the Committee is appointed by the Board and cannot be the Chairman of the Board
the Audit Committee may invite any person deemed appropriate to attend meetings and may take
such independent advice as it considers appropriate.
The Audit Committee is required to meet as and when required by the Chairman of the Committee.
Any member of the Committee may request the Chairman to call a meeting.
The Audit Committee is required to assess its effectiveness periodically. In addition the Charter is
required to be revised annually and updated as required.
Principle 5: Make Timely and Balanced Disclosure
Recommendation 5.1:
Companies should establish written policies designed to ensure compliance with ASX Listing Rule disclosure
requirements and to ensure accountability at a senior executive level for that compliance and disclose those
policies or a summary of those policies.
Disclosure:
The Company has established procedures to ensure there is timely disclosure to the ASX of price sensitive
information which may have a material effect on the price or value of the entity’s securities.
The Company also posts announcements on its web site to complement the official release of information to
the market.
Recommendation 5.2:
Companies should provide the information indicated in the “Guide to reporting on Principle 5.”
Disclosure:
A copy of the Continuous Disclosure Policy is available on the Company’s website in the Governance
section.
Joyce Corporation Ltd 2013 Annual Report I PAGE 27
CORPORATE GOVERNANCE STATEMENT (CONTINUED)
Principle 6: Respect the Right of Shareholders
Recommendation 6.1:
Companies should design a communications policy for promoting effective communication with shareholders
and encouraging their participation at general meetings and disclose their policy or a summary of that policy.
Disclosure:
The Company has an effective shareholder communication procedure. Communication of information to
shareholders is through the distribution of an annual report and half yearly report, announcements through
the ASX and the media regarding changes in its business.
The Company’s annual general meeting is a major forum for shareholders to ask questions about the
Company performance and the external auditors also are invited to attend the annual general meeting and
answer shareholder questions.
The Company maintains a web site which includes copies of all Corporate Governance policies and
procedures as well as all shareholder communications both current and historical.
Recommendation 6.2:
Companies should provide the information indicated in the “Guide to reporting on Principle 6.”
Disclosure:
A copy of the Shareholders Communications Policy is available on the Company’s website in the
Governance section.
Principle 7: Recognise and Manage Risk
Recommendation 7.1:
Companies should establish policies for the oversight and management of material business risks and
disclose a summary of those policies.
Disclosure:
The Company has developed a Risk Management and Oversight Policy, which sets out systems for risk
oversight, management and internal control. A copy of this policy is available on the Company website.
Recommendation 7.2:
The Board requires management to design and implement the risk management and internal control system
to manage the Company's material business risks and report to it on whether those risks are being managed
effectively. The Board discloses that management has reported to it as to the effectiveness of the Company's
management of its material business risks.
Disclosure:
The Company has completed the formalisation of its risk management system and reporting on identified
material business risks.
Following the development of the Risk Management and Oversight Policy the Board has determined to
review, the management of its material business risks each year. This system includes the preparation of a
risk register by management to identify the Company's material business risks and risk management
strategies for these risks. In addition, the process of management of material business risks has been
allocated to members of senior management. The risk register is formally reviewed at least annually and
updated as required.
During this process the Board will continue to monitor the Company’s risk management through ongoing
monitoring of management and operational performance, a comprehensive system of budgeting, forecasting
and reporting to the Board, regular presentations to the Board by management on the management of risks
associated with pending and existing legal issues, approval procedures for significant expenditures, the
functioning of the Audit Committee, comprehensive written policies on specific activities and corporate
governance, and regular communication between Directors on compliance and risk.
Joyce Corporation Ltd 2013 Annual Report I PAGE 28
CORPORATE GOVERNANCE STATEMENT (CONTINUED)
Principle 7: Recognise and Manage Risk (continued)
Recommendation 7.3:
The Board should disclose whether it has received assurance from the Chief Executive Officer (or
equivalent) and the Chief Financial Officer (or equivalent) that the declaration provided in accordance with
section 295A of the Corporations Act is founded on a sound system of risk management and internal control
and that the system is operating effectively in all material respects in relation to financial reporting risks.
Disclosure:
The Board requires assurance from the Executive Director and Chief Financial Officer that the declaration in
relation to section 295A of the Corporations Act is founded in a sound system of risk management and
internal control and that the system is operating effectively in all material aspects in relation to financial
reporting risks.
Recommendation 7.4:
Companies should provide the information indicated in the “Guide to reporting on Principle 7.”
Disclosure:
The Board has not received the report from management under Recommendation 7.2. Additional information
regarding this departure and the departure from Recommendation 7.2 is detailed above.
The Board has received the assurance from the Chief Executive Officer (or equivalent) and the Chief
Financial Officer (or equivalent) under Recommendation 7.3.
A copy of the Risk Management and Oversight Policy is available on the Company’s website in the
Governance section.
Principle 8: Remunerate Fairly and Responsibly
Recommendation 8.1:
The Board should establish a Remuneration Committee.
Disclosure:
The Company has established a Remuneration Committee.
Recommendation 8.2:
Companies should clearly distinguish the structure of non-executive Directors’ remuneration from that of
executive Directors and senior executives.
Disclosure:
Non-executive Directors are remunerated at a fixed fee for time, commitment and responsibilities.
Remuneration for non-executive Directors is not linked to the performance of the Company.
Pay and rewards for executive Directors and senior executives consists of a base salary and performance
incentives. Executives are offered a competitive level of base pay at market rates and are reviewed annually
to ensure market competitiveness.
Recommendation 8.3:
Companies should provide the information indicated in the “Guide to reporting on Principle 8.”
Disclosure:
Details of remuneration, including the Company’s policy on remuneration, are contained in the
“Remuneration Report” which forms a part of the Directors’ Report. The Company's remuneration policies
are reflected in the Company's Remuneration Committee Charter.
Joyce Corporation Ltd 2013 Annual Report I PAGE 29
CORPORATE GOVERNANCE STATEMENT (CONTINUED)
Principle 8: Remunerate Fairly and Responsibly (continued)
These policies are to establish competitive remuneration, including performance incentives, consistent with
long term development and success, to ensure remuneration is fair and reasonable, taking into account all
relevant factors, and within appropriate controls or limits, ensure performance and remuneration are
appropriately linked, that all remuneration packages are reviewed annually or on an ongoing basis in
accordance with management's remuneration packages and that retirement benefits or termination
payments (other than notice periods) will not be provided or agreed other than in exceptional circumstances.
A copy of the Remuneration Committee Charter is available on the Company’s website under Governance.
The Remuneration Committee held eight meetings during the Reporting Period. The Remuneration
Committee comprises of the following Directors:
Mr T R Hantke (Chairman of the Remuneration Committee)
Mr A Mankarios
Mr M A Gurry
Details of each of the Director's attendance at the Remuneration Committee meeting are set out in the
Directors' Report. There are no termination or retirement benefits for non-executive Directors (other than
superannuation).
During the Reporting Period the Company did not publicly disclose its policy on prohibiting transactions in
associated products which limit the risk of participating in unvested entitlements under any equity based
remuneration schemes. However, the Company's position is that such transactions are prohibited.
The Remuneration Committee is responsible for the performance review process for both the Board and the
Managing Director.
The Board undertakes an ongoing review in relation to its composition and skills mix of the Directors of the
Company.
Joyce Corporation Ltd 2013 Annual Report I PAGE 30
CORPORATE GOVERNANCE STATEMENT (CONTINUED)
Disclosure of Corporate Governance Practices Summary Statement
No. Recommendation
1.1: Companies should establish the functions reserved to the
Board and those delegated to senior executives and
disclose those functions.
Disclosure
Comply
1.2 Companies should disclose the process for evaluating the
Comply
performance of senior executives.
1.3 Companies should provide the information indicated in the
Comply
“Guide to reporting on Principle 1.”
2.1 A majority of the Board should be independent Directors.
2.2
The Chair should be an independent Director.
Departure from the recommendation. Refer
to Corporate Governance Statement
Departure from the recommendation. Refer
to Corporate Governance Statement
2.3
The roles of the Chair and Managing Director should not
be exercised by the same individual.
Comply
2.4
The Board should establish a Nomination Committee.
Departure from the recommendation. Refer
to Corporate Governance Statement
2.5 Companies should disclose the process for evaluating the
performance of the Board, its committees and individual
Directors.
Comply
2.6 Companies should provide the information indicated in the
Comply
“Guide to reporting on Principle 2.”
3.1 Companies should establish a Code of Conduct and
disclose the code or a summary of the code as to the
practices necessary
the
Company's integrity, the practices necessary to take into
account
the reasonable
legal obligations and
expectations of their stakeholders and the responsibility
and accountability of
reporting and
for
investigating reports of unethical practices.
to maintain confidence
individuals
their
in
Comply
3.2 Companies should establish a policy concerning trading in
Company securities by Directors, senior executives and
employees, and disclose the policy or a summary of that
policy.
Comply
3.3 Companies should provide the information indicated in the
Comply
“Guide to reporting on Principle 3.”
4.1
The Board should establish an Audit Committee.
Comply
Joyce Corporation Ltd 2013 Annual Report I PAGE 31
CORPORATE GOVERNANCE STATEMENT (CONTINUED)
Disclosure of Corporate Governance Practices Summary Statement
No. Recommendation
4.2
The Audit Committee should be structured so that it:
consists only of non-executive Directors
-
consists of a majority of independent Directors
-
is chaired by an independent Chair, who is not Chair of the Board
-
has at least three members.
-
Disclosure
Comply
4.3
The Audit Committee should have a formal charter.
Comply
4.4 Companies should provide the information indicated in the “Guide to reporting
Comply
on Principle 4.”
5.1 Companies should establish written policies designed to ensure compliance
with ASX Listing Rule disclosure requirements and to ensure accountability at
a senior executive level for that compliance and disclose those policies or a
summary of those policies.
Comply
5.2 Companies should provide the information indicated in the “Guide to reporting
Comply
on Principle 5.”
6.1 Companies should design a communications policy for promoting effective
communication with shareholders and encouraging their participation at
general meetings and disclose their policy or a summary of that policy.
Comply
6.2 Companies should provide the information indicated in the “Guide to reporting
Comply
on Principle 6.”
7.1 Companies should establish policies for the oversight and management of
Comply
material business risks and disclose a summary of those policies.
7.2
7.3
The Board requires management to design and implement
the risk
management and internal control system to manage the Company's material
business risks and report to it on whether those risks are being managed
effectively. The Board discloses that management has reported to it as to the
effectiveness of the Company's management of its material business risks.
The Board should disclose whether it has received assurance from the Chief
Executive Officer (or equivalent) and the Chief Financial Officer (or
equivalent) that the declaration provided in accordance with section 295A of
the Corporations Act is founded on a sound system of risk management and
internal control and that the system is operating effectively in all material
respects in relation to financial reporting risks.
Comply
Comply
Joyce Corporation Ltd 2013 Annual Report I PAGE 32
CORPORATE GOVERNANCE STATEMENT (CONTINUED)
Disclosure of Corporate Governance Practices Summary Statement
No. Recommendation
Disclosure
7.4 Companies should provide the information indicated in the “Guide to
Comply
reporting on Principle 7.”
8.1
The Board should establish a Remuneration Committee.
8.2 Companies should clearly distinguish the structure of non-executive
Directors’ remuneration from that of executive Directors and senior
executives.
Comply
Comply
8.3
Companies should provide the information indicated in the “Guide to
reporting on Principle 8.”
Comply
Joyce Corporation Ltd 2013 Annual Report I PAGE 33
ANNUAL FINANCIAL REPORT
FOR THE YEAR ENDED 30 JUNE 2013
Joyce Corporation Ltd 2013 Annual Report I PAGE 34
CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND
OTHER COMPREHENSIVE INCOME
FOR THE YEAR ENDED 30 JUNE 2013
Notes
Consolidated
30 June 2013
$000
30 June 2012
$000
Continuing operations
Revenue
Cost of sales
Gross Profit
Other income
Revaluation of investment property
Expenses from continuing operations
Distribution expenses
Marketing expenses
Occupancy expenses
Administration expenses
Loss on disposal of assets
Finance costs
Other expenses
Profit from continuing operations before income tax
Income tax benefit
Profit from continuing operations after tax
Discontinued operations
Loss for the year from discontinued operations
7
7
7
7
7
7
8
9
14,608
(5,431)
9,177
826
1,261
(885)
(684)
(1,500)
(5,386)
-
(519)
(39)
2,251
115
2,366
15,003
(5,367)
9,636
934
3,553
(976)
(657)
(1,638)
(5,161)
(1)
(711)
(75)
4,904
105
5,009
(1,698)
(1,974)
Net profit attributable to the members of Joyce Corporation Ltd
668
3,035
Other comprehensive income for the year net of tax
-
-
Total Comprehensive Income attributable to the members of
Joyce Corporation Ltd
668
3,035
Earnings per share for profit attributable to the members of
Joyce Corporation Ltd
Basic earnings per share (cents per share)
Diluted earnings per share (cents per share)
Earnings per share for profit from continuing operations
attributable to members of Joyce Corporation Ltd
Basic earnings per share (cents per share)
Diluted earnings per share (cents per share)
10
10
10
10
2.4
2.4
8.6
8.5
11.0
10.9
18.2
17.9
The consolidated statement of profit or loss and other comprehensive income is to be read in conjunction
with the notes to the consolidated financial statements set out on pages 39 to 86.
Joyce Corporation Ltd 2013 Annual Report I PAGE 35
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
AS AT 30 JUNE 2013
Notes
Consolidated
30 June 2013 30 June 2012 1 July 2011*
$000
$000
$000
ASSETS
Current Assets
Cash and cash equivalents
Trade and other receivables
Inventories
Other assets
Other financial assets
Total Current Assets
Non-current assets classified as held for sale
Total Current Assets
Non-Current Assets
Trade and other receivables
Other financial assets
Deferred tax asset
Plant and equipment
Investment property
Intangible assets
Total Non-Current assets
TOTAL ASSETS
LIABILITIES
Current liabilities
Trade and other payables
Interest-bearing loans and borrowings
Provisions
Total Current Liabilities
Non-Current Liabilities
Interest bearing loans and borrowings
Convertible Notes
Deferred tax liabilities
Provisions
Total Non-Current Liabilities
TOTAL LIABILITIES
NET ASSETS
EQUITY
Contributed equity
Reserves
Retained earnings / (Accumulated losses)
TOTAL EQUITY
11
12
13
14
16
15
12
16
8
17
18
19
20
21
22
21
8
22
23
24
3,439
1,003
1,960
311
954
7,667
41
7,708
72
-
2,629
612
16,283
10,122
29,718
37,426
5,302
70
890
6,262
6,374
-
2,399
258
9,031
15,293
22,133
17,845
5,321
(1,033)
22,133
3,774
572
4,223
410
-
8,979
204
9,183
25
57
2,112
463
15,000
10,222
27,879
37,062
5,912
61
1,465
7,438
5,402
-
2,007
291
7,700
15,138
21,924
17,814
5,321
(1,211)
21,924
3,780
1,166
4,275
560
-
9,781
-
9,781
85
39
1,120
922
11,100
10,225
23,491
33,272
5,260
635
1,194
7,089
4,869
2,180
1,120
485
8,654
15,743
17,529
15,634
5,321
(3,246)
17,529
* The 1 July 2011 and the 30 June 2012 Consolidated Financial Statement of Financial Position have been
restated to reflect prior year errors referred to in the Consolidated Statement of Changes in Equity.
The consolidated statement of financial position is to be read in conjunction with the notes to the
consolidated financial statements set out on pages 39 to 86.
Joyce Corporation Ltd 2013 Annual Report I PAGE 36
CONSOLIDATED STATEMENT OF CASHFLOWS
FOR THE YEAR ENDED 30 JUNE 2013
Notes
Consolidated
30 June 2013
$000
30 June 2012
$000
Cash flows from operating activities
Receipts from customers
Payments to suppliers and employees
Interest received
Interest paid
Operating cash flow
Franchisee settlement paid
Store closure costs
Net cash flows from/ (used in) operating activities
Cash flows from investing activities
Proceeds from sale of property, plant and equipment
Proceeds from security deposit
Purchase of convertible notes
Loan to franchisee
Purchase of property, plant and equipment
Net cash (used in)/provided by investing activities
Cash flows from financing activities
Proceeds from borrowings
Repayment of borrowings
Dividends paid
Net cash (used in) financing activities
Net (decrease) in cash and cash equivalents
Cash and cash equivalents at beginning of period
Cash and cash equivalents at end of period
Reconciliation of cash
Cash at bank and in hand
32
30
11
22,182
(20,568)
167
(520)
1,261
-
(750)
511
110
900
(900)
(100)
(344)
(334)
141
(60)
(593)
(512)
(335)
3,774
3,439
21,591
(19,800)
202
(716)
1,277
(601)
-
676
48
-
-
-
(283)
(235)
600
(641)
(406)
(447)
(6)
3,780
3,774
3,439
3,439
3,774
3,774
The consolidated statement of cash flows is to be read in conjunction with the notes to the consolidated
financial statements set out on pages 39 to 86.
Joyce Corporation Ltd 2013 Annual Report I PAGE 37
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 30 JUNE 2013
CONSOLIDATED
At 1 July 2011
Opening balance
adjustment
Transfers to and from
retained earnings
Adjusted balance at
1 July 2011
Contributed
Equity
Note
$000
Retained
Earnings /
(Accumulated
Losses)
$000
Asset
Revaluation
Reserve
Financial
Assets
Reserve
Total
Equity
$000
$000
$000
15,634
-
-
(394)
(389)
-
2,678
17,918
(389)
(2,643)
2,623
20
-
15,634
(3,426)
2,623
2,698
17,529
Issued Shares
Total comprehensive
income
Transfer to & from reserves
- Asset revaluation
- Financial assets
Dividends paid or provided
for
30
2,180
-
-
-
-
-
3,035
-
-
(820)
-
-
-
-
-
-
-
-
-
-
2,180
3,035
-
-
(820)
At 30 June 2012
17,814
(1,211)
2,623
2,698
21,924
At 1 July 2012
17,814
(1,211)
2,623
2,698
21,924
Issued Shares
Total comprehensive
income
Dividends paid or provided
for
30
31
-
-
-
668
(490)
-
-
-
-
-
-
31
668
(490)
At 30 June 2013
17,845
(1,033)
2,623
2,698
22,133
The opening reserves at 1 July 2011 have been adjusted for an allocation error in 2006 by increasing
revaluation reserve by $2.62 M and reducing retained earnings by the same amount. There is no change
to the total shareholder funds.
A prior year error adjustment has been made to equity of $0.39 M resulting from prior period errors . This
is consistent with a prior period error adjustment in the December 2012 half year.
The consolidated statement of changes in equity is to be read in conjunction with the notes to the consolidated
financial statements set out on pages 39 to 86.
Joyce Corporation Ltd 2013 Annual Report I PAGE 38
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
1. CORPORATE INFORMATION
The consolidated financial statements of Joyce Corporation Ltd (“the Company”) for the year ended 30
June 2013 were authorised for issue in accordance with a resolution of the directors of the Company
dated 24 September 2013. Joyce Corporation Ltd is a Company incorporated in Australia and limited by
shares which are publicly traded on the Australian Securities Exchange.
The nature of the operation and principal activities of the Company and its controlled entities are
described in note 6.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The consolidated financial statements comprise the financial statements of Joyce Corporation Ltd and its
controlled subsidiaries (‘the Consolidated Entity’).
(a)
Basis of preparation
This general purpose financial report has been prepared in accordance with Australian Accounting
Standards, other authoritative pronouncements of the Australian Accounting Standards Board (including
Australian Accounting Interpretations) and the Corporations Act 2001.
Joyce Corporation Ltd is a for-profit entity for the purpose of preparing the Financial Statements.
Compliance with IFRS
Australian Accounting Standards include Australian equivalents to International Financial Reporting
Standards (“AIFRS”). Compliance with AIFRS ensures that the financial report of the Consolidated Entity
complies with International Financial Reporting Standards (“IFRS”).
New and amended standards adopted by the group
None of the new standards and amendments to standards that are mandatory for the first time for the
financial year beginning 1 July 2012 affected any of the amounts recognised in the current period or any
prior period and are not likely to affect future periods. However, amendments made to AASB 101
Presentation of Financial Statements effective 1 July 2012 now require the statement of comprehensive
income to show the items of comprehensive income grouped into those that are not permitted to be
reclassified to profit or loss in a future period and those that may have to be reclassified if certain
conditions are met.
Historical cost convention
These financial statements have been prepared under the historical cost convention.
Critical accounting estimates
The preparation of financial statements in conformity with AIFRS requires the use of certain critical
accounting estimates. It also requires Management to exercise judgement in the process of applying the
Consolidated Entity’s accounting policies. Areas involving a higher degree of judgement or complexity, or
areas where assumptions and estimates are significant to the financial statements are disclosed in note
5.
(b)
Principles of consolidation
Subsidiaries are all those entities (including special purpose entities) over which the Company has the
power to govern the financial and operating policies, generally accompanying a shareholding of more
than one-half of the voting rights. The existence and effect of potential voting rights that are currently
exercisable or convertible are considered when assessing whether the Consolidated Entity controls
another entity.
A list of controlled entities is contained in Note 27 to the financial statements.
Joyce Corporation Ltd 2013 Annual Report I PAGE 39
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
(b)
Principles of consolidation (continued)
The consolidation accounting method used for the consolidated financial statements that include the
financial statements made up to the reporting date each year of the Company and its subsidiaries is
disclosed under the note on 'Business Combinations' below. Consolidated financial statements are the
financial statements of the Consolidated Entity presented as those of a single economic entity. The
consolidated financial statements are prepared using uniform accounting policies for like transactions and
other events in similar circumstances.
All significant intra-Consolidated Entity balances and transactions, including income, expenses and
dividends, are eliminated in full on consolidation. The results of the investees acquired or disposed of
during the financial year are accounted for from the respective dates of acquisition or up to the dates of
disposal. On disposal, the attributable amount of goodwill, if any, is included in the determination of the
gain or loss on disposal.
Minority interests, being that portion of the profit or loss and net assets of subsidiaries attributable to
equity interests held by persons outside the group, are shown separately within the Equity section of the
consolidated Statement of Financial Position and in the consolidated Statement of Profit or Loss and
Other Comprehensive Income.
Business combinations
(c)
Acquisitions of subsidiaries and businesses are accounted for using the acquisition method. The
consideration for each acquisition is measured at the aggregate of the fair values (at the date of
exchange) of assets given, liabilities incurred or assumed, and equity instruments issued by the
Consolidated Entity in exchange for control of the acquiree. Acquisition-related costs are recognised in
profit or loss as incurred.
Where applicable, the consideration for the acquisition includes any asset or liability resulting from a
contingent consideration arrangement, measured at its acquisition-date fair value. Subsequent changes
in such fair values are adjusted against the cost of acquisition where they qualify as measurement period
adjustments (see below). All other subsequent changes in the fair value of contingent consideration
classified as an asset or liability are accounted for in accordance with relevant accounting standards.
Changes in the fair value of contingent consideration classified as equity are not recognised.
Where a business combination is achieved in stages, the Consolidated Entity’s previously held interests
in the acquired entity are remeasured to fair value at the acquisition date (i.e. the date the Consolidated
Entity attains control) and the resulting gain or loss, if any, is recognised in profit or loss. Amounts arising
from interests in the acquiree prior to the acquisition date that have previously been recognised in other
comprehensive income are reclassified to profit or loss, where such a treatment would be appropriate if
that interest were disposed of.
The acquiree’s identifiable assets, liabilities and contingent liabilities that meet the conditions for
recognition under AASB 3 (2008) are recognised at their fair value at the acquisition date, except that:
(cid:120) deferred tax assets or liabilities and liabilities or assets related to employee benefit arrangements
are recognised and measured in accordance with AASB 112 Income Taxes and AASB 119
Employee Benefits respectively;
liabilities or equity instruments related to the replacement by the Consolidated Entity of an
acquiree’ share-based payment awards are measured in accordance with AASB 2 Share-based
Payment; and
(cid:120)
(cid:120) assets (or disposal groups) that are classified as held for sale in accordance with AASB 5 Non-
current Assets Held for Sale and Discontinued Operations are measured in accordance with that
standard.
If the initial accounting for a business combination is incomplete by the end of the reporting period in
which the combination occurs, the Consolidated Entity reports provisional amounts for the terms for which
the accounting is incomplete. Those provisional amounts are adjusted during the measurement period
(see below), or additional assets or liabilities are recognised, to reflect new information obtained about
facts and circumstances that existed as of that date.
Joyce Corporation Ltd 2013 Annual Report I PAGE 40
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
(c)
Business combinations (continued)
The measurement period is the period from the date of acquisition to the date the Group obtains complete
information about facts and circumstances that existed as of the acquisition date – and is subject to a
maximum of one year.
(d)
Segment reporting
Operating segments are identified on the basis of internal reports about components of the Consolidated
Entity that are regularly reviewed by the chief operating decision makers in order to allocate resources to
the segments and to assess their performance.
Foreign currency translation
(e)
Functional and presentation currency
Items included in the financial statements of each of the Consolidated Entity’s entities are measured
using the currency of the primary economic environment in which the entity operates (‘the functional
currency’). The consolidated financial statements are presented in Australian Dollars, which is the
Consolidated Entity’s presentation currency.
Transactions and balances
Foreign currency transactions are translated into the functional currency using the exchange rates
prevailing at the dates of the transactions. Foreign exchange gains and losses resulting from the
settlement of such transactions and from the translation, at year end exchange rates, of monetary assets
and liabilities denominated in foreign currencies are recognised in the statement of profit or loss and other
comprehensive income, except when they are deferred in equity as qualifying cash flow hedges and
qualifying net investment hedges or are attributable to part of the net investment in a foreign operation.
Translation differences on non-monetary financial assets and liabilities are reported as part of the fair
value gain or loss. Translation differences on non-monetary financial assets and liabilities such as
equities held at fair value through profit or loss are recognised in profit or loss as part of the fair value gain
or loss. Translation differences on non-monetary financial assets such as equities classified as available
for sale financial assets are included in the fair value reserve in equity.
All companies of the Consolidated Entity have Australian Dollars as a functional currency.
Revenue recognition
(f)
Revenue is recognised to the extent that it is probable that the economic benefits will flow to the
Consolidated Entity and the revenue can be reliably measured. The following specific recognition criteria
must also be met before revenue is recognised:
Sale of goods
Revenue from the sale of goods is recognised at the point of delivery as this corresponds to the transfer
of significant risks and rewards of ownership of the goods and the cessation of all involvement in those
goods.
Rendering of services
Revenue from the rendering of a service is recognised upon completion of the service to customers.
Interest income
Interest income is recognised using the effective interest rate method, which, for floating rate financial
assets is the rate inherent in the instrument.
Dividend income
Dividend income is recognised when the right to receive a dividend has been established.
Franchise revenue
Revenue from franchising activities is recognised based on business written sales from franchised stores.
Rental revenue
Rental revenue is recognised monthly as defined in the relevant lease agreements.
All revenue is stated net of the amount of goods and services tax (GST).
Joyce Corporation Ltd 2013 Annual Report I PAGE 41
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Income tax
(g)
The income tax expense or revenue for the period is the tax payable on the current period’s taxable
income based on the national income tax rate for each jurisdiction adjusted by changes in deferred tax
assets and liabilities attributable to temporary differences and to unused tax losses.
Deferred income tax is provided in full, using the liability method, on temporary differences arising
between the tax bases of assets and liabilities and their carrying amounts in the consolidated financial
statements. However, the deferred income tax is not accounted for if it arises from initial recognition of an
asset or liability in a transaction other than a business combination that at the time of the transaction
affects neither accounting, nor taxable profit or loss. Deferred income tax is determined using tax rates
(and laws) that have been enacted or substantially enacted by the reporting date and are expected to
apply when the related deferred income tax asset is realised or the deferred income tax liability is settled.
Deferred tax assets are recognised for deductible temporary differences and unused tax losses only if it is
probable that future taxable amounts will be available to utilise those temporary differences and losses.
Deferred tax liabilities and assets are not recognised for temporary differences between the carrying
amount and tax bases of investments in controlled entities where the parent entity is able to control the
timing of the reversal of the temporary differences and it is probable that the differences will not reverse in
the foreseeable future.
Deferred tax assets and liabilities are offset when there is a legally enforceable right to offset current tax
assets and liabilities and when the deferred tax balances relate to the same taxation authority. Current
tax assets and tax liabilities are offset where the entity has a legally enforceable right to offset and intends
either to settle on a net basis, or to realise the asset and settle the liability simultaneously.
Current and deferred tax balances attributable to amounts recognised directly in equity are also
recognised directly in equity.
Tax Consolidation
Joyce Corporation Ltd and its wholly-owned Australian subsidiaries have formed an income tax
consolidated group under tax consolidation legislation. Each entity in the group recognises its own
current and deferred tax assets and liabilities. Such taxes are measured using the ‘stand-alone taxpayer’
approach to allocation. Current tax liabilities (assets) and deferred tax assets arising from unused tax
losses and tax credits in the subsidiaries are immediately transferred to the head entity.
The group notified the Australian Tax Office that it had formed an income tax consolidated group to apply
from 1 July 2003. The tax consolidated group has entered a tax funding arrangement whereby each
company in the group contributes to the income tax payable by the group in proportion to their
contribution to the group’s taxable income. Differences between the amounts of net tax assets and
liabilities derecognised and the net amounts recognised pursuant to the funding arrangement are
recognised as either a contribution by, or distribution to the head entity.
Joyce Corporation Ltd 2013 Annual Report I PAGE 42
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Hire purchases and leases
(h)
Hire purchases and leases of property, plant and equipment where the Consolidated Entity, as lessee,
has substantially all the risks and rewards of ownership are classified as finance leases. Finance leases
are capitalised at the lease’s inception at the fair value of the leased property or, if lower, the present
value of the minimum lease payments. The corresponding rental obligations, net of finance charges, are
included in other short term and long term payables. Each lease payment is allocated between the
liability and finance cost. The finance cost is charged to the statement of profit or loss and other
comprehensive income over the lease period so as to produce a constant periodic rate of interest on the
remaining balance of the liability for each period. The property, plant and equipment acquired under
finance leases are depreciated over the shorter of the asset’s useful life and the lease term.
Leases in which a significant portion of the risks and rewards of ownership are not transferred to the
Consolidated Entity as lessee are classified as operating leases. Payments made under operating leases
(net of any incentives received from the lessor) are charged to the statement of profit or loss and other
comprehensive income on a straight line basis over the period of the lease.
Lease income from operating leases where the Consolidated Entity is a lessor is recognised as income
on a straight line basis over the lease term.
Impairment of non-financial assets
(i)
Goodwill and intangible assets that have an indefinite useful life are not subject to amortisation and are
tested annually for impairment or more frequently if events or changes in circumstances indicate that they
might be impaired. Other assets are reviewed for impairment whenever events or changes in
circumstances indicate that the carrying amount may not be recoverable. An impairment loss is
recognised for the amount by which the asset’s carrying amount exceeds its recoverable amount. The
recoverable amount is the higher of an asset’s fair value less costs to sell and value in use. For the
purposes of assessing impairment, assets are grouped at the lowest levels for which there are separately
identifiable cash inflows which are largely independent of the cash inflows from other assets or groups of
assets (cash generating units). Non-financial assets other than goodwill that suffered impairment are
reviewed for possible reversal of the impairment at each reporting date.
Cash and cash equivalents
(j)
Cash and cash equivalents includes cash on hand, deposits held at call with financial institutions, other
short term, highly liquid investments with original maturities of three months or less that are readily
convertible to known amounts of cash and which are subject to an insignificant risk of changes in value,
and bank overdrafts. Bank overdrafts are shown within borrowings in current liabilities on the statement of
financial position.
Trade receivables
(k)
Trade receivables are recognised initially at fair value and subsequently measured at amortised cost
using the effective interest method, less a provision for impairment. Trade receivables are generally due
for settlement within 30 days.
Collectability of trade receivables is reviewed on an ongoing basis. Debts which are known to be
uncollectible are written off. A provision for impairment of trade receivables is established when there is
objective evidence that the Consolidated Entity will not be able to collect all amounts due according to the
original terms of the receivables. Significant financial difficulties of the debtor, probability that the debtor
will enter bankruptcy or financial reorganisation, and default or delinquency in payments (more than 30
days overdue) are considered indicators that the trade receivable is impaired.
Joyce Corporation Ltd 2013 Annual Report I PAGE 43
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Trade receivables (Continued)
(k)
The amount of the provision is the difference between the asset’s carrying amount and the present value
of estimated future cash flows, discounted at the original effective interest rate. Cash flows relating to
short term receivables are not discounted if the effect of discounting is immaterial. The amount of the
provision is recognised in the statement of profit or loss and other comprehensive income in other
expenses.
Inventories
(l)
Inventories are stated at the lower of cost and net realisable value. Cost comprises expenditure incurred
in acquiring the inventories and in bringing them to their existing condition and location.
Costs are assigned to individual items of inventory on a basis of weighted average costs. Costs of
purchased inventory are determined after deducting rebates and discounts. Net realisable value is the
estimated selling price in the ordinary course of business less the estimated costs of completion and the
estimated costs necessary to make the sale.
Fair value estimation
(m)
The fair value of financial assets and financial liabilities must be estimated for recognition and
measurement or for disclosure purposes.
The carrying value less impairment provision of trade receivables and payables are assumed to
approximate their fair values due to their short term nature. The fair value of financial liabilities for
disclosure purposes is estimated by discounting the future contractual cash flows at the current market
interest rate that is available to the Consolidated Entity for similar financial instruments.
(n)
Investments and other financial assets
Classification
The Consolidated Entity classifies its financial assets in the following categories: financial assets at fair
value through profit or loss, loans and receivables, held-to-maturity investments and available-for-sale
financial assets.
The classification depends on the purpose for which the investments were acquired. Management
determines the classification of its investments at initial recognition and, in the case of assets classified as
held-to-maturity, re-evaluates this designation at each reporting date.
(i) Financial assets at fair value through profit or loss
Financial assets at fair value through profit or loss are financial assets held for trading. A financial asset is
classified in this category if acquired principally for the purpose of selling in the short term. Derivatives are
classified as held for trading unless they are designated as hedges. Assets in this category are classified
as current assets.
(ii) Loans and receivables
Loans and receivables are non-derivative financial assets with fixed or determinable payments that are
not quoted in an active market. They are included in current assets, except for those with maturities
greater than 12 months after the reporting date which are classified as non-current assets. Loans and
receivables are included in trade and other receivables in the statement of financial position.
(iii) Held-to-maturity investments
Held-to-maturity investments are non-derivative financial assets with fixed or determinable payments and
fixed maturities that the Consolidated Entity’s management has the positive intention and ability to hold to
maturity. If the Consolidated Entity were to sell other than an insignificant amount of held-to-maturity
financial assets, the whole category would be tainted and reclassified as available-for-sale. Held-to-
maturity financial assets are included in non-current assets, except for those with maturities less than 12
months from the reporting date, which are classified as current assets.
Joyce Corporation Ltd 2013 Annual Report I PAGE 44
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
(n)
Investments and other financial assets (Continued)
(iv) Available-for-sale financial assets
Available-for-sale financial assets, comprising principally marketable equity securities, are non-derivatives
that are either designated in this category or not classified in any of the other categories. They are
included in non-current assets unless management intends to dispose of the investment within 12 months
of the reporting date. Investments are designated as available-for-sale if they do not have fixed maturities
and fixed or determinable payments and management intends to hold them for the medium to long term.
Recognition and derecognition
Regular purchases and sales of financial assets are recognised on trade-date - the date on which the
Consolidated Entity commits to purchase or sell the asset. Investments are initially recognised at fair
value plus transaction costs for all financial assets not carried at fair value through profit or loss. Financial
assets carried at fair value through profit or loss, are initially recognised at fair value and transaction costs
are expensed in the statement of profit or loss and other comprehensive income. Financial assets are
derecognised when the rights to receive cash flows from the financial assets have expired or have been
transferred and the Consolidated Entity has transferred substantially all the risks and rewards of
ownership.
When securities classified as available-for-sale are sold, the accumulated fair value adjustments
recognised in equity are included in the statement of profit or loss and other comprehensive income as
gains and losses from investment securities.
Subsequent measurement
Loans and receivables and held-to-maturity investments are carried at amortised cost using the effective
interest method.
Available-for-sale financial assets and financial assets at fair value through profit and loss are
subsequently carried at fair value. Gains or losses arising from changes in the fair value of the 'financial
assets at fair value through profit or loss' category are presented in the statement of profit or loss and
other comprehensive income within other income or other expenses in the period in which they arise.
Dividend income from financial assets at fair value through profit and loss is recognised in the statement
of profit or loss and other comprehensive income as part of revenue from continuing operations when the
Consolidated Entity’s right to receive payments is established.
Changes in the fair value of monetary securities denominated in a foreign currency and classified as
available-for-sale are analysed between translation differences resulting from changes in amortised cost
of the security and other changes in the carrying amount of the security. The translation differences
related to changes in the amortised cost are recognised in profit or loss, and other changes in carrying
amount are recognised in equity. Changes in the fair value of other monetary and non-monetary
securities classified as available-for-sale are recognised in equity.
Impairment
The Consolidated Entity assesses at each reporting date whether there is objective evidence that a
financial asset or a group of financial assets is impaired. In the case of equity securities classified as
available-for-sale, a significant or prolonged decline in the fair value of a security below its cost is
considered as an indicator that the securities are impaired. If any such evidence exists for available-for-
sale financial assets, the cumulative loss - measured as the difference between the acquisition cost and
the current fair value, less any impairment loss on that financial asset previously recognised in profit or
loss - is removed from equity and recognised in the statement of profit or loss and other comprehensive
income. Impairment losses recognised in the statement of profit or loss and other comprehensive income
on equity instruments classified as available-for-sale are not reversed through the statement of profit or
loss and other comprehensive income.
Joyce Corporation Ltd 2013 Annual Report I PAGE 45
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
(n)
Investments and other financial assets (Continued)
Financial Guarantees
Where material, financial guarantees issued, which requires the issuer to make specified payments to
reimburse the holder for a loss it incurs because a specified debtor fails to make payment when due, are
recognised as a financial liability at fair value on initial recognition.
The guarantee is subsequently measured at the higher of the best estimate of the obligation and the
amount initially recognised less, when appropriate, cumulative amortisation in accordance with AASB
118: Revenue. Where the entity gives guarantees in exchange for a fee, revenue is recognised under
AASB 118.
The fair value of financial guarantee contracts has been assessed using a probability weighted
discounted cash flow approach. The probability has been based on:
–
–
–
the likelihood of the guaranteed party defaulting in a year period;
the proportion of the exposure that is not expected to be recovered due to the guaranteed party
defaulting; and
the maximum loss exposed if the guaranteed party were to default.
(o)
Non-current assets (or disposal groups) held for sale and discontinued operations
Non-current assets (or disposal groups) are classified as held for sale if their carrying amount will be
recovered principally through a sale transaction rather than through continuing use and a sale is
considered highly probable. They are measured at the lower of their carrying amount and fair value less
costs to sell, except for assets such as deferred tax assets, assets arising from employee
benefits, financial assets and investment property that are carried at fair value and contractual rights
under insurance contracts, which are specifically exempt from this requirement.
An impairment loss is recognised for any initial or subsequent write-down of the asset (or disposal group)
to fair value less costs to sell. A gain is recognised for any subsequent increases in fair value less costs
to sell of an asset (or disposal group), but not in excess of any cumulative impairment loss previously
recognised. A gain or loss not previously recognised by the date of the sale of the non-
current asset (or disposal group) is recognised at the date of derecognition.
Non-current assets (including those that are part of a disposal group) are not depreciated or amortised
while they are classified as held for sale. Interest and other expenses attributable to the liabilities of a
disposal group classified as held for sale continue to be recognised.
Non-current assets classified as held for sale and the assets of a disposal group classified as held for
sale are presented separately from the other assets in the Statement of Financial Position. The liabilities
of a disposal group classified as held for sale are presented separately from other liabilities in the
Statement of Financial Position.
A discontinued operation is a component of the entity that has been disposed of or is classified as held
for sale and that represents a separate major line of business or geographical area of operations, is
part of a single co-ordinated plan to dispose of such a line of business or area of operations, or is a
subsidiary acquired exclusively with a view to resale. The results of discontinued operations are
presented separately in the Statement of Profit or Loss and Other Comprehensive Income.
Derivatives and hedging activities
(p)
Derivatives are initially recognised at fair value on the date a derivative contract is entered into and are
subsequently remeasured to their fair value at each reporting date. The accounting for subsequent
changes in fair value depends on whether the derivative is designated as a hedging instrument, and if so,
the nature of the item being hedged. The Consolidated Entity designates certain derivatives as either:
(cid:120) hedges of the fair value of recognised assets or liabilities or a firm commitment (fair value
hedges),
(cid:120) hedges of the cash flows of recognised assets and liabilities and highly probable forecast
transactions (cash flow hedges), or
(cid:120) hedges of a net investment in a foreign operation (net investment hedges).
Joyce Corporation Ltd 2013 Annual Report I PAGE 46
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
(p)
Derivatives and hedging activities (continued)
The Consolidated Entity documents at the inception of the hedging transaction the relationship between
hedging instruments and hedged items, as well as its risk management objective and strategy for
undertaking various hedge transactions. The Consolidated Entity also documents its assessment, both at
hedge inception and on an ongoing basis, of whether the derivatives that are used in hedging
transactions have been and will continue to be highly effective in offsetting changes in fair values or cash
flows of hedged items.
Property, plant and equipment
(q)
Land and buildings are shown at fair value, based on periodic, but at least triennial, valuations by external
independent valuers, less subsequent depreciation for buildings. Any accumulated depreciation at the
date of revaluation is eliminated against the gross carrying amount of the asset and the net amount is
restated to the revalued amount of the asset. All other property, plant and equipment are stated at
historical cost less depreciation. Historical cost includes expenditure that is directly attributable to the
acquisition of the items.
Subsequent costs are included in the asset’s carrying amount or recognised as a separate asset, as
appropriate, only when it is probable that future economic benefits associated with the item will flow to the
Consolidated Entity and the cost of the item can be measured reliably. The carrying amount of the
replaced part is derecognised. All other repairs and maintenance are charged to the statement of profit or
loss and other comprehensive income during the reporting period in which they are incurred.
Depreciation is calculated over the estimated useful life of the asset as follows:
(cid:120) Plant and equipment - 1 to 20 years;
(cid:120) Leased plant and equipment - over 5 to 6 years; and
(cid:120) Leasehold improvements – 3 to 20 years.
The assets’ residual values and useful lives are reviewed, and adjusted if appropriate, at each reporting
date. An asset’s carrying amount is written down immediately to its recoverable amount if the asset’s
carrying amount is greater than its estimated recoverable amount. Gains and losses on disposals are
determined by comparing proceeds with the carrying amount. These are included in the statement of
profit or loss and other comprehensive income. When revalued assets are sold, it is the Consolidated
Entity’s policy to transfer the amounts included in other reserves in respect of those assets to retained
earnings.
Investment property
(r)
Investment property, which is property held to earn rentals and/or for capital appreciation (including
property under construction for such purposes), is measured initially at its cost, including transaction
costs. Subsequent to initial recognition, investment property is measured at fair value. Gains and losses
arising from changes in the fair value of investment property are included in profit or loss in the period in
which they arise.
Joyce Corporation Ltd 2013 Annual Report I PAGE 47
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
(s)
Intangible assets
Acquired both separately and from a business combination
Intangible assets acquired separately are capitalised at cost. Following initial recognition, the cost model
is applied to the class of intangible assets. Where amortisation is charged on assets with finite lives, this
expense is taken to the statement of profit or loss and other comprehensive income through the
‘amortisation expenses’ line item.
Intangible assets, excluding development costs, created within the business are not capitalised and
expenditure is charged against profits in the period in which the expenditure is incurred intangible assets
are tested for impairment where an indicator of impairment exists and in the case of indefinite lived
intangibles annually, either individually or at the cash generating unit level. Useful lives are also examined
on an annual basis and adjustments, where applicable, are made on a prospective basis.
(i) Goodwill
Goodwill represents the excess of the cost of an acquisition over the fair value of the Consolidated
Entity’s share of the net identifiable assets of the acquired subsidiary/associate at the date of acquisition.
Goodwill on acquisitions of subsidiaries is included in intangible assets. Goodwill on acquisitions of
associates is included in investments in associates. Goodwill is not amortised. Instead, goodwill is tested
for impairment annually or more frequently if events or changes in circumstances indicate that it might be
impaired, and is carried at cost less accumulated impairment losses. Gains and losses on the disposal of
an entity include the carrying amount of goodwill relating to the entity sold.
Goodwill is allocated to cash-generating units for the purpose of impairment testing. Each of those cash-
generating units represents the Consolidated Entity’s investment in each country of operation by each
operating segment. Cash-generating units to which goodwill is allocated is as follows:
(cid:120) Bedshed Franchising cash generating unit
(cid:120) Bedshed Stores cash generating unit
(ii) IT development and software
Costs incurred in developing products or systems and costs incurred in acquiring software and licenses
that will contribute to future period financial benefits through revenue generation and/or cost reduction are
capitalised to software and systems. Costs capitalised include external direct costs of materials and
service, direct payroll and payroll related costs of employees’ time spent on the project. Amortisation is
calculated on a straight-line basis over periods generally ranging from 3 to 5 years. IT development costs
include only those costs directly attributable to the development phase and are only recognised following
completion of technical feasibility and where the Consolidated Entity has an intention and ability to use
the asset.
Joyce Corporation Ltd 2013 Annual Report I PAGE 48
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Trade and other payables
(t)
These amounts represent liabilities for goods and services provided to the Consolidated Entity prior to the
reporting date which are unpaid. The amounts are unsecured and are usually paid within 45 days of
recognition.
Provisions
(u)
Provisions for legal claims, service warranties and make good obligations are recognised when the
Consolidated Entity has a present legal or constructive obligation as a result of past events, it is probable
that an outflow of resources will be required to settle the obligation and the amount has been reliably
estimated. Provisions are not recognised for future operating losses.
Where there are a number of similar obligations, the likelihood that an outflow will be required in
settlement is determined by considering the class of obligations as a whole. A provision is recognised
even if the likelihood of an outflow with respect to any one item included in the same class of obligations
may be small.
Provisions are measured at the present value of Management’s best estimate of the expenditure required
to settle the present obligation at the reporting date. The discount rate used to determine the present
value reflects current market assessments of the time value of money and the risks specific to the liability.
The increase in the provision due to the passage of time is recognised as interest expense.
Employee benefits
(v)
(i) Wages and salaries and annual leave and sick leave
Liabilities for wages and salaries, including non-monetary benefits, and annual leave expected to be
settled within 12 months of the reporting date are recognised in other payables in respect of employees'
services up to the reporting date and are measured at the amounts expected to be paid when the
liabilities are settled.
(ii) Long service leave
The liability for long service leave is recognised in the provision for employee benefits and measured as
the present value of expected future payments to be made in respect of services provided by employees
up to the reporting date using the projected unit credit method. Consideration is given to expected future
wage and salary levels, experience of employee departures and periods of service. Expected future
payments are discounted using market yields at the reporting date on national government bonds with
terms to maturity and currency that match, as closely as possible, the estimated future cash outflows.
(iii) Profit-sharing and bonus plans
The Consolidated Entity recognises a liability and an expense for bonuses and profit-sharing based on a
formula that takes into consideration the profit attributable to the Company’s shareholders after certain
adjustments. The Consolidated Entity recognises a provision where contractually obliged or where there
is a past practice that has created a constructive obligation.
(iv) Termination benefits
Termination benefits are payable when employment is terminated before the normal retirement date, or
when an employee accepts voluntary redundancy in exchange for these benefits. The Consolidated Entity
recognises termination benefits when it is demonstrably committed to either terminating the employment
of current employees according to a detailed formal plan without possibility of withdrawal or providing
termination benefits as a result of an offer made to encourage voluntary redundancy. Benefits falling due
more than 12 months after reporting date are discounted to present value.
Joyce Corporation Ltd 2013 Annual Report I PAGE 49
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Borrowings
(w)
Borrowings are initially recognised at fair value, net of transaction costs incurred. Borrowings are
subsequently measured at amortised cost. Any difference between the proceeds (net of transaction
costs) and the redemption amount is recognised in the statement of profit or loss and other
comprehensive income over the period of the borrowings using the effective interest method. Fees paid
on the establishment of loan facilities, which are not an incremental cost relating to the actual draw-down
of the facility, are recognised as prepayments and amortised on a straight-line basis over the term of the
facility. Bank loans are carried at amortised cost. Transaction costs are deducted against the outstanding
principal amount at amortised cost using the effective interest rate method.
Convertible notes
(x)
Convertible notes are compound financial instruments with separate liability and equity components
identified on initial recognition. Transaction costs are deducted against the liability component of these
financial instruments at amortised cost using the effective interest rate method.
Contributed equity
(y)
Ordinary shares are classified as equity.
Incremental costs directly attributable to the issue of new shares or options are shown in equity as a
deduction, net of tax, from the proceeds. Incremental costs directly attributable to the issue of new
shares or options for the acquisition of a business are not included in the cost of the acquisition as part of
the purchase consideration.
If the entity reacquires its own equity instruments, e.g. as the result of a share buy-back, those
instruments are deducted from equity and the associated shares are cancelled. No gain or loss is
recognised in the profit or loss and the consideration paid including any directly attributable incremental
costs (net of income taxes) is recognised directly in equity.
Dividends
(z)
Provision is made for the amount of any dividend declared, being appropriately authorised and no longer
at the discretion of the entity, on or before the end of the financial year but not distributed at reporting
date.
(aa)
Earnings per share
(i) Basic earnings per share
Basic earnings per share is calculated by dividing the profit attributable to equity holders of the Company,
excluding any costs of servicing equity other than ordinary shares, by the weighted average number of
ordinary shares outstanding during the financial year, adjusted for bonus elements in ordinary shares
issued during the year.
(ii) Diluted earnings per share
Diluted earnings per share adjusts the figures used in the determination of basic earnings per share to
take into account the after income tax effect of interest and other financing costs associated with dilutive
potential ordinary shares and the weighted average number of additional ordinary shares that would have
been outstanding assuming the conversion of all dilutive potential ordinary shares.
(bb) Comparatives
When required by applicable accounting standards, comparative figures have been adjusted to conform
to changes in presentation for the current financial year.
Rounding of Amounts
(cc)
The Company has applied the relief available to it under ASIC Class Order 98/100 and accordingly,
amounts in the financial report and directors' report have been rounded off to the nearest $1,000.
Joyce Corporation Ltd 2013 Annual Report I PAGE 50
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
(dd) Goods and Services Tax (GST)
Revenues, expenses and assets are recognised net of the amount of associated GST, unless the GST
incurred is not recoverable from the taxation authority. In this case it is recognised as part of the cost of
acquisition of the asset or as part of the expense. Receivables and payables are stated inclusive of the
amount of GST receivable or payable. The net amount of GST recoverable from, or payable to, the
taxation authority is included with other receivables or payables in the statement of financial position.
(ee)
New accounting standards and interpretations
At the date of authorisation of these financial statements, certain new standards, amendments and
interpretations to existing standards have been published but are not yet effective, and have not been
adopted early by the Company.
Management anticipates that all of the relevant pronouncements will be adopted in the Company’s
accounting policies for the first period beginning after the effective date of the pronouncement.
Information on new standards, amendments and interpretations that are expected to be relevant to the
Company’s financial statements is provided below. Certain other new standards and interpretations have
been issued but are not expect to have a material impact on the Company’s financial statements.
AASB 9 Financial Instruments (effective from 1 January 2015)
The AASB aims to replace AASB 139 Financial Instruments: Recognition and Measurement in its entirety.
The replacement standard (AASB 9) is being issued in phases. To date, the chapters dealing with
recognition, classification, measurement and derecognition of financial assets and liabilities have been
issued. These chapters are effective for annual periods beginning 1 January 2013. Further chapters
dealing with impairment methodology and hedge accounting are still being developed. Management
have yet to assess the impact that this amendment is likely to have on the financial statements of the
Company. However, they do not expect to implement the amendments until all chapters of AASB 9 have
been published and they can comprehensively assess the impact of all changes.
Consolidation Standards
A package of consolidation standards encompassing AASB 10 Consolidated Financial Statements, AASB
11 Joint Venture Arrangements, AASB 12 Disclosure of Interest in Other Entities and consequential
amendments to AASB 127 Separate Financial Statements and AASB 128 Investments in Associates and
Joint Ventures, are effective for annual periods beginning, or after, 1 January 2013. The Group’s
management have yet to assess the impact of these new and revised standards on the Group’s
consolidated financial statements.
AASB 13 Fair Value Measurement
AASB 13 is applicable to annual periods beginning on or after 1 January 2013. The standard clarifies the
definition of fair value and provides related guidance and enhanced disclosures about fair value
measurements. The Group’s management have yet to assess the impact of this new standard.
AASB 119 (reissued September 2011) Employee Benefits
AASB 119 is applicable to annual periods beginning on or after 1 January 2013. Main changes include
elimination of the ‘corridor’ approach for deferring gains/losses for defined benefit plans, actuarial
gains/losses on remeasuring the defined benefit plan obligation/asset to be recognised in OCI rather than
in profit or loss, and cannot be reclassified in subsequent periods, subtle amendments to timing for
recognition of liabilities for termination benefits, and employee benefits expected to be settled (as
opposed to due to settled under current standard) within 12 months after the end of the reporting period
are short-term benefits, and therefore not discounted when calculating leave liabilities. Annual leave not
expected to be used within 12 months of end of reporting period will in future be discounted when
calculating leave liability. This standard has no impact as there are no annual leave provision amounts
that are non-current. The group will apply this from 1 July 2013.
Joyce Corporation Ltd 2013 Annual Report I PAGE 51
3. GOING CONCERN
At 30 June 2013, the Consolidated Entity has recorded a profit before tax of $2,251k for continuing
operations and $2,366k after tax before including discontinued operations and reported an overall profit
after tax of $668k with positive operating cash flows totalling $1,410k before store closure costs.
There were no breaches of bank lending covenants (refer Note 21) at reporting date and no breaches up
to the date of this report.
4. FINANCIAL RISK MANAGEMENT
The Consolidated Entity's activities expose it to a variety of financial risks: market risk (including currency
risk and interest rate risk), credit risk and liquidity risk. The Consolidated Entity's overall risk management
program focuses on the unpredictability of financial markets and seeks to minimise potential adverse
effects on the financial performance of the Consolidated Entity.
The Consolidated Entity makes occasional use of derivative financial instruments such as foreign
exchange contracts to manage foreign currency risk. Derivatives are exclusively used for hedging
purposes, i.e. not as trading or other speculative instruments. The Consolidated Entity uses different
methods to measure different types of risk to which it is exposed. These methods include sensitivity
analysis in the case of interest rate, foreign exchange and other price risks and aging analysis for credit
risk.
Risk management is carried out by the CFO under the supervision of the Board of Directors. The Board
provides principles for overall risk management, as well as policies and supervision covering specific
areas, such as foreign exchange risk, interest rate risk, credit risk, use of derivative financial instruments
and non-derivative financial instruments, and investment of excess liquidity.
The Consolidated Entity holds the following financial instruments:
Financial assets
Cash and cash equivalents
Trade and other receivables
Other financial assets
Financial liabilities
Trade and other payables
Interest-bearing loans and borrowings
Notes
Consolidated
30 June 2013
$000
30 June 2012
$000
11
12
16
20
21
3,439
1,024
954
5,417
5,302
6,444
11,746
3,774
597
57
4,428
5,918
5,463
11,381
Joyce Corporation Ltd 2013 Annual Report I PAGE 52
4. FINANCIAL RISK MANAGEMENT (CONTINUED)
(a) Market risk
(i) Foreign exchange risk
The Consolidated Entity makes purchases some of which are exposed to foreign exchange risk arising
from various currency exposures, primarily with respect to the US dollar, in the ordinary course of
business. Foreign exchange risk arises from future commercial transactions and recognised assets and
liabilities denominated in a currency that is not the Consolidated Entity’s functional currency. The risk is
measured using sensitivity analysis and cash flow forecasting.
Management has a standard policy for dealing with foreign currency risk in the purchasing function of the
Consolidated Entity in order to manage foreign exchange risk against the Consolidated Entity’s functional
currency. Material purchase contracts which are denominated in foreign currency are regularly reviewed
by management and when it is considered necessary the currency risk exposure may be managed via
the use of foreign currency contracts. The current policy is to forward buy USD contracts equivalent to fifty
percent of six months forward US dollar denominated orders.
The Consolidated Entity’s had exposure to foreign currency risk with respect to the US Dollar at the at 30
June 2013 of US$614k.
(ii) Cash flow interest rate risks
The Consolidated Entity's main interest rate risk arises from long-term borrowings. Borrowings issued at
variable rates expose the Consolidated Entity to cash flow interest rate risk. The Consolidated Entity
policy is to manage both risks as appropriate in conjunction with considerations about minimising the
Consolidated Entity’s liquidity risk (see below), the current state of the yield curve and expectations about
interest rates in the medium term and the need for flexibility so as to minimise the Consolidated Entity’s
interest expense.
(ii) Cash flow interest rate risk (continued)
As at the reporting date, all of the Consolidated Entity had the following variable and fixed rate financial
instruments:
Weighted
Average
Interest rate
%
Weighted
Average
Interest
rate
%
30 June
2013
$000
30 June
2012
$000
2.18%
3,439
2.15%
3,774
3,439
3,774
Financial assets
Cash and cash equivalents
Financial liabilities
Overdraft – secured (i)
Commercial bill –secured – variable
Commercial bill –secured – fixed (ii)
8.05%
n/a
3.75%
8.65%
n/a
7.88%
20
-
6,300
6,320
1
-
5,400
5,401
(i) The overdraft facility pays interest at variable interest rates plus a line fee and is renewed annually.
(ii) The Commercial bill facility debt attracts interest at a fixed annual interest rate to 31 March 2013 and
the facility has a term which is approved to 30 July 2015. The facility has a secured deposit of $1.7
million netted off which accrues and interest income at 3.25% fixed until 17 July 2013.This facility is
bank bill based and incurs a line fee on use.
An analysis by maturities is provided in (c) below.
Joyce Corporation Ltd 2013 Annual Report I PAGE 53
4. FINANCIAL RISK MANAGEMENT (CONTINUED)
(a) Market risk (continued)
The Consolidated Entity analyses its interest rate exposure on a dynamic basis. Various scenarios are
modelled taking into consideration refinancing, renewal of existing positions, alternative financing and
hedging. Based on these scenarios, the Consolidated Entity calculates the impact on profit and loss of a
defined interest rate shift. The scenarios are run only for liabilities that represent the major interest-
bearing positions.
Based on the various scenarios, the Consolidated Entity manages its cash flow interest rate risk adopting
an appropriate mix of fixed versus variable rate debt and also an appropriate mix of debt maturities to
provide it with flexibility to repay debt as quickly as possible whilst having liquidity available to take
advantage of business opportunities as they arise.
Consolidated Entity sensitivity
The major debt facility drawn at 30 June 2013 is a fixed interest rate (see above). Variable interest rates
apply to the overdraft and cash and cash equivalents. On balances at 30 June 2013, if interest rates had
changed by -/+ 100 basis points from the year-end rates with all other variables held constant, post-tax
profit for the year would have been $15k/$15k higher/lower (2012 - Nil higher/lower), mainly as a result of
a higher/lower interest expense arising from borrowings offset by lower/higher interest income from cash
and cash equivalents. Equity would have been $15k/$15k higher/lower (2012 - Nil higher/lower) for the
same reasons as above.
(b)
Credit risk
Credit risk is limited to high credit quality financial institutions with which deposits are held and high credit
quality wholesale customers with which the Consolidated Entity trades.
Credit risk is managed on a Consolidated Entity basis. Credit risk arises from cash and cash equivalents,
derivative financial instruments and deposits with banks and financial institutions, as well as credit
exposures to wholesale customers, including outstanding receivables and committed transactions. For
banks and financial institutions, only independently rated parties with a minimum rating of 'A' are
accepted. If wholesale customers are independently rated, these ratings are used. Otherwise, if there is
no independent rating, risk control assesses the credit quality of the customer, taking into account its
financial position, past experience and other factors. Individual risk limits are set based on internal or
external ratings in accordance with limits set internally. The compliance with credit limits by wholesale
customers is regularly monitored by line management.
The maximum exposure to credit risk at the reporting date is the carrying amount of the financial assets
as summarised in each applicable note. For wholesale customers without credit rating the Consolidated
Entity generally retains title over the goods sold until full payment is received. For some trade receivables
the Consolidated Entity may also obtain security in the form of guarantees, deeds of undertaking or letters
of credit which can be called upon if the counterparty is in default under the terms of the agreement. The
Consolidated Entity does not hold any credit derivatives to offset its credit exposure. The Consolidated
Entity trades only with recognised, creditworthy third parties, and as such collateral is not requested nor is
it the Consolidated Entity's policy to securitise its trade and other receivables.
The credit quality of financial assets that are neither past due nor impaired can be assessed by reference
to external credit ratings (if available) or to historical information about counterparty default rates:
Cash and cash equivalents
AA
Trade and other receivables
Non-rated
Other financial assets
Non-rated
CONSOLIDATED
2013
$000
2012
$000
3,439
3,774
1,024
954
597
57
5,417
4,428
Joyce Corporation Ltd 2013 Annual Report I PAGE 54
4.
(c)
FINANCIAL RISK MANAGEMENT (CONTINUED)
Liquidity risk
Prudent liquidity risk management implies maintaining sufficient cash and marketable securities, the
availability of funding through an adequate amount of committed credit facilities and the ability to close
out market positions. The Consolidated Entity manages liquidity risk by continuously monitoring forecast
and actual cash flows and matching the maturity profiles of financial assets and liabilities. Due to the
dynamic nature of the underlying businesses, the Consolidated Entity aims at maintaining flexibility in
funding by keeping committed credit lines available and, where possible, with a variety of counterparties.
Surplus funds are generally only invested in overnight deposits or used to repay debt.
Maturities of financial assets and financial liabilities
The tables below analyse the Consolidated Entity’s financial liabilities, net and gross settled derivative
financial instruments into relevant maturity groupings based on the remaining period at the reporting date
to the contractual maturity date. The amounts disclosed in the table are the contractual undiscounted
cash flows.
Consolidated disclosures
Year ended 30 June 2013
Consolidated financial assets
Cash and cash equivalents
Trade and other receivables
Other financial assets
Consolidated financial liabilities
Trade and other payables
Interest bearing loans & borrowings
Net maturity
Year ended 30 June 2012
Consolidated financial assets
Cash and cash equivalents
Trade and other receivables
Other financial assets
Consolidated financial liabilities
Trade and other payables
Interest bearing loans & borrowings
Net maturity
(cid:148)6 months
$000
6-12
months
$000
1-5 years
$000
>5
years
$000
3,439
1,003
954
5,396
5,302
46
5,348
48
-
-
-
-
-
24
24
(24)
-
21
-
21
-
6,374
6,374
(6,353)
-
-
-
-
-
-
-
-
(cid:148)6 months
$000
6-12
months
$000
1-5 years
$000
>5
years
$000
3,774
572
-
4,346
5,918
44
5,962
(1,616)
-
-
-
-
-
25
57
82
-
-
17
5,402
17 5,402
(5,320)
(17)
-
-
-
-
-
-
-
-
Total
$000
3,439
1,024
954
5,417
5,302
6,444
11,746
(6,329)
Total
$000
3,774
597
57
4,428
5,918
5,463
11,381
(6,953)
Joyce Corporation Ltd 2013 Annual Report I PAGE 55
4. FINANCIAL RISK MANAGEMENT (CONTINUED)
(c)
Liquidity risk (continued)
Financing arrangements
The Consolidated Entity had access to the following undrawn bank borrowing facilities at the reporting
date:
30 June 2012
Consolidated
30 June 2013
Consolidated
Facility limit
$000
6,042
Used
$000
5,402
Available
$000
640
6,042
5,420
622
The Consolidated Entity had $622,000 of available overdraft facilities to manage its liquidity as at 30 June
2013 (2012: $640,000) represented by an $8,000,000 fixed facility and an overdraft facility of $642,000
offset by a secured deposit of $1,700,000. The consolidated entity had $766,077 cash at bank as at the
reporting date excluding funds held in trust set out at note 11. In addition the Consolidated Entity had a
net investment in inventories of $1,960,000 as at 30 June 2013 (2012: $4,223,000). The Consolidated
Entity has additional non cash facilities for bank guarantees.
(d) Fair value estimation
The fair value of financial assets and financial liabilities must be estimated for recognition and
measurement or for disclosure purposes. The carrying value less impairment provision of trade
receivables and payables are assumed to approximate their fair values due to their short-term nature.
The fair value of financial liabilities for disclosure purposes is estimated by discounting the future
contractual cash flows at the current market interest rate that is available to the Consolidated Entity for
similar financial instruments. The fair value of forward exchange contracts is determined using forward
exchange market rates at the reporting date.
(e) Capital risk management
Management controls the capital of the Consolidated Entity in order to maintain a good debt to equity
ratio, provide the shareholders with adequate returns and ensure that the Consolidated Entity can fund its
operations and continue as a going concern. The Consolidated Entity’s debt and capital includes ordinary
share capital and financial liabilities, supported by financial assets. The Consolidated Entity is not subject
to any externally imposed capital requirements other than as disclosed in note 21 (f).
Management effectively manages the Consolidated Entity’s capital by assessing the Consolidated Entity’s
financial risks and adjusting its capital structure in response to changes in these risks and in the market.
These responses include the management of debt levels, distributions to shareholders and share issues.
There have been no changes in the strategy adopted by management to control the capital of the
Consolidated Entity since the prior year. This strategy is to ensure that the Consolidated Entity’s gearing
ratio remain below 40%. The gearing ratio for the year ended 30 June 2013 and 30 June 2012 is as
follows:
Total borrowings
Less cash and cash equivalents
Net debt
Total equity
Gearing ratio
Note
21
11
CONSOLIDATED
2013
$000
6,444
(3,439)
3,005
22,133
2012
$000
5,463
(3,774)
1,689
21,918
14%
8%
Joyce Corporation Ltd 2013 Annual Report I PAGE 56
5. CRITICAL ACCOUNTING ESTIMATES AND JUDGEMENTS
Estimates and judgements are continually evaluated and are based on historical experience and other
factors, including expectations of future events that may have a financial impact on the entity and that are
believed to be reasonable under the circumstances.
The Consolidated Entity makes estimates and assumptions concerning the future. The resulting
accounting estimates will, by definition, seldom equal the related actual results. The estimates and
assumptions that have a significant risk of causing a material adjustment to the carrying amounts of
assets and liabilities within the next financial year are discussed below.
Impairment testing of goodwill
The Consolidated Entity assesses impairment at each reporting date by evaluating conditions specific to
the Consolidated Entity that may lead to impairment of assets. Where an impairment trigger exists, the
recoverable amount of the asset is determined. Value-in-use calculations performed in assessing
recoverable amounts incorporate a number of key estimates. Impairment of $100,000 (2012: nil) has
been recognised in respect of goodwill for the year ended 30 June 2013. See note 19 for further details.
Valuation of investment property
The Consolidated Entity assesses investment property values at each reporting date by obtaining
certificates of valuations from licensed valuers in accordance with applicable accounting standards.
During the year ended 30 June 2013 the investment property values were determined by Directors to
have increased by $1,251,785 (2012: $3,450,000) and this value was bought to account to reflect the
current market value of the properties in the financial statements. Refer to note 18 for further details.
Recognition of deferred taxation assets
The Consolidated Entity has deferred tax assets at 30 June 2013 of Nil (2012: $347,000) which were not
brought to account, associated with tax losses arising in Australia the benefits of which will only be
realised if the conditions for deductibility are met.
Restructuring costs
The Consolidated Entity brought to account a provision associated with closure of some underperforming
company owned stores. The remaining lease terms have reduced to allow commercial negotiations to be
available for surrender of leases. A total closure provision of $351k (2012: $950k) has been made in the
reporting period.
6. SEGMENT INFORMATION
(a) AASB 8 Operating segments
Operating Segments are identified on the basis of internal reports about components of the Consolidated
Entity that are regularly reviewed by the chief operating decision makers (The Board of Directors) in order
to allocate resources to the segments and to assess their performance.
The operating businesses are organised and managed separately according to the nature of the products
and services provided, with each segment representing a strategic business unit that offers different
products and serves different markets.
The Consolidated Entity has the following three operating segments:
(cid:120) The Bedshed retail bedding franchise operation;
(cid:120) The operation of Consolidated Entity owned Bedshed stores in Western Australia, Victoria, New
South Wales and Queensland; and
(cid:120) The property in New South Wales which is leased under the sale agreement of the Foam
Business.
Refer to note 9 for a description of discontinued operations. Transfer prices between operating segments
are set at an arms-length basis in a manner similar to transactions with third parties.
Joyce Corporation Ltd 2013 Annual Report I PAGE 57
6. SEGMENT INFORMATION (CONTINUED)
Operating segments
The following table presents revenue and profit information and certain asset and liability information
regarding operating segments for the year ended 30 June 2013.
Continuing Operations
Bedshed
Franchising
$000
Bedshed
Stores
$000
Investment
Properties
/ Joyce
$000
4,628
-
4,628
-
-
9,972
-
9,972
-
-
698
-
698
-
-
1,337
556
744
15,980
1,109
17,395
4,046
1,110
6,789
4
13
-
340
234
-
31
-
1,261
Discontinued
Operations
Store
Closures
$000
4,597
-
4,597
Total
$000
19,896
-
19,896
-
134
4,597
20,030
(1,668)
(30)
(1,698)
-
(1,698)
-
(1,698)
314
-
314
949
-
949
-
11
-
969
104
1,073
(520)
553
115
668
34,798
2,628
37,426
12,894
2,399
15,293
375
258
1,261
Total
$000
15,299
-
15,299
-
134
15,433
2,637
134
2,771
(520)
2,251
115
2,366
34,484
2,628
37,112
11,945
2,399
14,344
375
247
-
Year ended 30 June 2013
Revenue
Total segment revenue
Inter-segment sales
Total segment revenue
Inter-segment elimination
Unallocated revenue – Interest
received
Total consolidated revenue
Result
Segment result
Unallocated expenses net of
unallocated income
Profit (loss) before tax and
finance costs
Finance costs
Profit (loss) before income tax
Income tax benefit
Net profit (loss) for the year
Assets and liabilities
Segment assets
Unallocated assets
Total assets
Segment liabilities
Unallocated liabilities
Total liabilities
Other segment information
Capital expenditure
Depreciation and amortisation
Other non-cash segment
expenses/revaluations
Joyce Corporation Ltd 2013 Annual Report I PAGE 58
6. SEGMENT INFORMATION (CONTINUED)
Operating segments (continued)
The following table presents revenue and profit information and certain asset and liability information
regarding operating segments for the year ended 30 June 2012.
Continuing Operations
Discontinued
Operations
Bedshed
Franchising
$000
Bedshed
Stores
$000
Investment
Properties
/ Joyce
$000
Sub-total
$000
Store
Closures
$000
4,797
-
4,797
-
-
10,028
-
10,028
-
-
794
-
794
-
-
1,868
236
3,266
10,220
7,410
15,616
3,639
1,272
6,062
6
15
-
18
111
-
297
-
3,553
15,619
-
15,619
-
244
15,863
5,370
244
5,614
(710)
4,904
105
5,009
33,246
2,112
35,358
10,973
2,264
13,237
321
126
-
5,131
-
5,131
-
-
5,131
(1,968)
-
(1,968)
(6)
(1,974)
-
(1,974)
2,099
-
2,099
1,907
-
1,907
24
67
-
Total
$000
20,750
-
20,750
-
244
20,994
3,402
244
3,646
(716)
2,930
105
3,035
35,345
2,112
37,457
12,880
2,264
15,144
345
193
3,553
Year ended 30 June 2012
Revenue
Total segment revenue
Inter-segment sales
Total segment revenue
Inter-segment elimination
Unallocated revenue
Total consolidated revenue
Result
Segment result
Unallocated expenses net of
unallocated income
Profit (loss) before tax and
finance costs
Finance costs
Profit (loss) before income tax
Income tax benefit
Net profit (loss) for the year
Assets and liabilities
Segment assets
Unallocated assets
Total assets
Segment liabilities
Unallocated liabilities
Total liabilities
Other segment information
Capital expenditure
Depreciation and amortisation
Other non-cash segment
expenses
(b) Geographic segments
The Consolidated Entity operates in one principal geographical area namely that of Australia (country of
domicile).
(c) Information about major customers
No single customer of the Consolidated Entity generated more than 10% of the Consolidated Entity’s
revenue during the year ended 30 June 2013 (2012: None).
Joyce Corporation Ltd 2013 Annual Report I PAGE 59
7. REVENUE, INCOME AND EXPENSES
(a) Revenue, Income and Expenses from Continuing Operations
Revenue
Sale of goods
Provision of services
Total revenue
Other income
Interest received
Rental income
Profit on disposal of assets
Other
Total other income
CONSOLIDATED
2013
$000
10,582
4,026
14,608
134
690
-
2
826
2012
$000
10,435
4,568
15,003
244
689
-
1
934
Gain on revaluation of investment property
1,261
3,553
Finance costs
Bank loans and overdrafts
Finance charges payable under finance leases and hire
purchase contracts
Total finance costs
513
7
520
703
8
711
Depreciation and other significant items of expenditure included in statement of profit or loss and other
comprehensive income
Included in expenses:
Depreciation and amortisation
Impairment of goodwill
Loss on disposal of assets
Other Costs
147
100
-
-
126
-
1
-
(b) Lease payments and other expenses included in the statement of profit or loss and other
comprehensive income – overall operations
Minimum lease payments - operating lease
(c) Employee benefits expense – overall operations
Wages and salaries
Defined contribution superannuation expense
Other employee benefits expense
CONSOLIDATED
2013
$000
3,131
3,792
348
277
4,416
2012
$000
3,021
4,002
388
401
4,791
Joyce Corporation Ltd 2013 Annual Report I PAGE 60
8.
INCOME TAX
The major components of income tax expense for the year ended 30 June 2013 are:
Consolidated Statement of comprehensive income – continuing
operations
Current Income tax
Current income tax expense
Deferred income tax
Relating to origination and reversal of temporary differences
Recognition of previously unrecognised deferred tax assets
Under provision in respect of prior years
CONSOLIDATED
2013
$000
2012
$000
-
210
(335)
10
-
(105)
-
-
Income tax benefit relating to continuing operations
(115)
(105)
Consolidated Statement of comprehensive income –
discontinued operations
Deferred income tax
Relating to origination and reversal of temporary differences
Income tax benefit relating to discontinued operations
-
-
-
-
Income tax benefit relating to overall operations
(115)
(105)
A reconciliation of income tax expense applicable to accounting profit before income tax at the statutory
income tax rate to income tax expense at the Consolidated Entity’s effective income tax rate for the years
ended 30 June 2013 and 30 June 2012 is as follows:
CONSOLIDATED
Profit before income tax
Income tax expense /(benefit) calculated at the statutory income tax
rate
of 30% (2010: 30%)
Expenditure not allowable for income tax purposes
Deferred tax asset temporary differences not previously brought to
account
Deferred tax asset losses not previously brought to account, now
brought to account
Under provision in respect of prior years
2013
$000
553
166
44
-
(335)
10
(115)
2012
$000
2,930
879
2
(6)
(980)
-
(105)
Income tax benefit recognised in profit or loss – continuing operations
(115)
(105)
Joyce Corporation Ltd 2013 Annual Report I PAGE 61
8.
INCOME TAX (CONTINUED)
Tax consolidation
Joyce Corporation Ltd and its 100% owned subsidiaries are a tax Consolidated Entity. Members of the
Consolidated Entity have not entered into any tax sharing or tax funding arrangements. At the reporting
date, the possibility that the head entity will default on its tax payment obligations is remote. The head
entity of the tax Consolidated Entity is Joyce Corporation Ltd.
Measurement method adopted under UIG 1052 Tax Consolidation Accounting
The head entity and the controlled entities in the tax Consolidated Entity continue to account for their own
current and deferred tax amounts. The Consolidated Entity has applied the Consolidated Entity allocation
approach in determining the appropriate amount of current taxes and deferred taxes to allocate to
members of the tax Consolidated Entity. The current and deferred tax amounts are measured in a
systematic manner that is consistent with the broad principles in AASB 112 Income Taxes.
In addition to its own current and deferred tax amounts, the head entity also recognises current tax
liabilities (or assets) and the deferred tax assets arising from unused tax losses and unused tax credits
assumed from controlled entities in the tax Consolidated Entity.
Tax consolidation contributions/ (distributions)
The Consolidated Entity has recognised no consolidation contribution adjustments.
Taxation of financial arrangements (TOFA)
Legislation is in place which changes the tax treatment of financial arrangements including the tax
treatment of hedging transactions. The Consolidated Entity has assessed the potential impact of these
changes on the Consolidated Entity's tax position. No impact has been recognised and no adjustments
have been made to the deferred tax and income tax balances at 30 June 2013 (2012: Nil).
Joyce Corporation Ltd 2013 Annual Report I PAGE 62
8. INCOME TAX (CONTINUED)
Deferred income tax
Deferred income tax at 30 June relates to the following:
Deferred tax
liabilities
Investment property
Plant and equipment
Fair value gain
Other
Balance at 30 June 2013
Deferred tax assets
Plant and equipment
Trade and other
receivables
Pensions and other
employer obligations
Provisions
Other
Unused tax losses
Opening
balance
Charged
to income
Closing
balance,
30 June 13
$000
$000
$000
(1,730)
-
(260)
(17)
(400)
-
-
8
(2,130)
-
(260)
(9)
(2,007)
(392)
(2,399)
$000
$000
$000
52
6
91
477
273
1,213
3
(1)
-
(130)
72
573
55
5
91
347
345
1,786
Balance at 30 June 2013
2,112
517
2,629
The Consolidated Entity has deferred tax assets of $Nil (2012: $347,000) which were not brought to
account, associated with tax losses arising in Australia the benefits of which will only be realised if the
conditions for deductibility set out in note 1(b) occur.
At 30 June 2013, there is no recognised or unrecognised deferred income tax liability (2012: Nil) for taxes
that would be payable on the unremitted earnings of certain of the Consolidated Entity’s subsidiaries, as
the Consolidated Entity has no liability for additional taxation should such amounts be remitted.
Joyce Corporation Ltd 2013 Annual Report I PAGE 63
8. INCOME TAX (CONTINUED)
Deferred income tax at 30 June 2012 relates to the following:
Deferred tax
liabilities
Investment property
Plant and equipment
Fair value gain
Other
Balance at 30 June 2012
Deferred tax assets
Plant and equipment
Trade and other
receivables
Pensions and other
employer obligations
Provisions
Other
Unused tax losses
Opening
balance
Charged
to income
Closing
balance,
30 June 12
$000
$000
$000
(768)
(47)
(260)
(45)
(962)
47
-
28
(1,730)
-
(260)
(17)
(1,120)
(887)
(2,007)
$000
$000
$000
-
6
94
332
455
223
52
-
(3)
145
(182)
980
52
6
91
477
273
1,213
Balance at 30 June 2012
1,120
992
2,112
Joyce Corporation Ltd 2013 Annual Report I PAGE 64
9. DISCONTINUED OPERATIONS
(a) Plan to close some unprofitable Company owned stores
During the year ended 30 June 2013, the Consolidated Entity became committed to the closure of one
unprofitable company owned store. In consequence, the Directors have provisioned $351k for closure of
the underperforming company owned store.
(b) Analysis of loss for the year from discontinued operations
The combined results of the discontinued operations (i.e. all the stores committed to the closure) included
in the statement of profit or loss and other comprehensive income are set out below. The comparative
profit or loss and cash flows from discontinued operations have been re-presented to include those
operations classified as discontinued in the current period
Loss for the year from discontinued operations
Revenue
Cost of sales
Gross profit
Other income
Expenses
Store Closure Provision
Loss from discontinued operations before tax
Attributable income tax benefit
Other comprehensive income
2013
$000
4,314
(3,114)
1,200
2012
$000
5,131
(2,936)
2,195
283
105
(2,830)
(351)
(3,181)
(3,324)
(950)
(1,974)
-
-
(1,698)
(1,974)
-
-
Loss for the year from discontinued operations (attributable to owners
of Joyce Corporation Ltd).
(1,698)
(1,974)
Cash flows from discontinued operations
Net cash flows from operating activities
Net cash flows from investing activities
Net cash flows from financing activities
Net cash flows
(1,046)
-
-
(1,046)
(729)
-
-
(729)
Joyce Corporation Ltd 2013 Annual Report I PAGE 65
10. EARNINGS PER SHARE
Basic earnings per share amounts are calculated by dividing net profit for the year attributable to ordinary
equity holders of the parent by the weighted average number of ordinary shares outstanding during the
year.
Diluted earnings per share amounts are calculated by dividing the net profit attributable to ordinary
shareholders (after deducting interest on the convertible redeemable preference shares) by the weighted
average number of ordinary shares outstanding during the year (adjusted for the effects of dilutive options
and dilutive convertible non-cumulative redeemable preference shares).
The following reflects the income and share data used in the total operations basic and diluted earnings
per share computations:
Net profit/(loss) attributable to equity holders from
continuing operations for basic earnings per share
Effect of dilutive equity instruments
Net profit attributable to equity holders from continuing
operations for diluted earnings per share
CONSOLIDATED
2013
$000
2,366
-
2012
$000
5,009
-
2,366
5,009
Profit/(loss) attributable to equity holders from discontinued
operations
(1,698)
(1,974)
Net profit attributable to ordinary shareholders for basic
earnings per share
Effect of dilutive equity instruments
Net profit attributable to ordinary shareholders for diluted
earnings per share
668
-
668
3,035
-
3,035
Number of
shares
Number of
shares
Weighted average number of ordinary shares for basic
earnings per share including partly paid
27,968,255
24,801,496
Adjusted weighted average number of ordinary shares for
diluted earnings per share
27,968,255
24,801,496
Weighted average number of converted, lapsed or cancelled
potential ordinary shares included in diluted earnings per share
-
-
Weighted average number of partly paid ordinary shares
(issued at $1.955 and paid to $1.312) included in basic and
diluted earnings per share.
380,000
380,000
Earnings per share are included at the foot of the Statement of Profit or Loss and Other Comprehensive Income
Joyce Corporation Ltd 2013 Annual Report I PAGE 66
11. CASH AND CASH EQUIVALENTS
For the purposes of the statement of cash flows, cash and cash equivalents are comprised of the
following:
Cash at bank and in hand (a)
CONSOLIDATED
2013
$000
3,439
3,439
2012
$000
3,774
3,774
(a) Amounts held in trust for Bedshed marketing and other funds
Included within the cash and cash equivalents balance are funds allocated for the specific use of the
Bedshed marketing and other funds on behalf of the Consolidated Entity’s franchise owned and Company
owned stores. At 30 June 2013 the total of this balance was $2,673,232 (30 June 2012: $2,899,251). The
funds held in trust are specifically excluded and released from the registered charge over the entity held
by St George bank. Refer to note 20 for further information.
12. TRADE AND OTHER RECEIVABLES
Current
Trade receivables*
Allowance for impairment loss (a)
Non-current
Trade receivables
Other receivables
(a) Allowance for impairment loss
1,044
(41)
1,003
21
51
72
592
(20)
572
25
-
25
Trade receivables are non-interest bearing and are generally on 30 day terms. A provision for impairment
loss is recognised when there is objective evidence that an individual trade receivable is impaired. An
impairment provision of $41,248 (2012: $20,248) has been recognised by the Consolidated Entity.
At 30 June, the ageing analysis of current trade receivables is as follows:
Total
$000
1,044
0-30
Days
$000
701
31-60
Days
$000
157
61-90
Days
PDNI*
$000
4
61-90
Days
CI*
$000
-
+91
Days
PDNI*
$000
141
+91
Days
CI*
$000
41
2013 Consolidated
2012 Consolidated
592
351
162
9
-
50
20
* Past due not impaired ('PDNI')
Considered impaired ('CI')
Receivables past due but not considered impaired are: Consolidated Entity: $145,019 (2012: $58,940).
Payment terms on these amounts have not been re-negotiated however credit has been stopped until full
payment is made. Each operating unit has been in direct contact with the relevant debtor and is satisfied
that payment will be received in full. Other balances within trade and other receivables do not contain
impaired assets and are not past due. It is expected that these other balances will be received when due.
Joyce Corporation Ltd 2013 Annual Report I PAGE 67
12. TRADE AND OTHER RECEIVABLES (CONTINUED)
Movement in the provision for impairment of receivables is as follows:
Opening balance at 1 July
Charge for the year
Amounts written-off
Closing balance at 30 June
(b) Fair value and credit risk
CONSOLIDATED
2013
$000
20
21
-
41
2012
$000
20
-
-
20
Due to the short term nature of these receivables, their carrying value is assumed to approximate their
fair value. The maximum exposure to credit risk is the fair value of receivables. Collateral is not held as
security, nor is it the Consolidated Entity's policy to transfer (on-sell) receivables to special purpose
entities.
(c) Foreign exchange and interest rate risk
Detail regarding foreign exchange and interest rate risk exposure is disclosed in note 4.
13. INVENTORIES
Stock on hand at cost
Provision for impairment (a)
(a) Provision for impairment
CONSOLIDATED
2013
$000
2,077
(117)
1,960
2012
$000
4,256
(33)
4,223
Write-downs of inventories to net realisable value recognised as an expense during the year ended 30
June 2013 amounted to $116,893 (2012: $33,255). The reduction in provision has been written back to
cost of goods sold as losses were realised.
14. OTHER ASSETS
Current
Accrued revenue
Prepayments
Other receivables
CONSOLIDATED
2013
$000
20
96
195
311
2012
$000
42
77
291
410
Joyce Corporation Ltd 2013 Annual Report I PAGE 68
15. NON-CURRENT ASSETS CLASSIFIED AS HELD FOR SALE
Current
At 1 July 2012
Plant and equipment
Disposals
At 30 June 2013
CONSOLIDATED
2013
$000
204
37
(200)
41
2012
$000
-
204
-
204
The Plant and equipment at 30 June 2013 related to stores provisioned for closure at the reporting date.
16. OTHER FINANCIAL ASSETS
Current
Investment in convertible notes at cost (a)
Investments in listed shares at fair value through profit or loss
Non-current
Investments in listed shares at fair value through profit or loss
(a) Convertible notes
CONSOLIDATED
2013
$000
900
54
954
-
954
2012
$000
-
-
-
57
57
During the reporting period Joyce invested in Convertible Notes for a total value of $900,000. The
convertible notes may be converted into shares in whole or in part at the sole discretion of the Noteholder
at any time on or before the Redemption date in respect of the applicable drawdown. The redemption
date in respect to a drawdown is a date no later than 12 months from the applicable drawdown. The
number of shares to be issued upon conversion of all or the part of the convertible notes shall be the
number calculated by dividing the monies payable which the Noteholder has elected to be converted into
shares by the issue price of $1.00 per note. The Convertible Notes attract an interest rate of 8.75% per
annum receivable monthly in advance as from the applicable Draw down Date until the Redemption Date
in respect of that Drawdown and includes the Redemption Date. Each convertible note has a face value
of $1 and is secured by a first ranking security granted by KWB Group Pty Ltd over all of its assets and
undertaking in favour of the Noteholder.
Joyce Corporation Ltd 2013 Annual Report I PAGE 69
17. PLANT AND EQUIPMENT
CONSOLIDATED
Leasehold
improvements
$000
Plant and
equipment
$000
Leased
Plant and
Equipment
$000
Year ended 30 June 2013
At 1 July 2012
Net of accumulated depreciation
Additions
Disposals
Transfer to assets held for sale
Transfers
Depreciation charge for the year
At 30 June 2013
Net of accumulated depreciation
At 1 July 2012
Cost
Accumulated depreciation and impairment
Net carrying amount
At 30 June 2013
Cost
Accumulated depreciation and impairment
Net carrying amount
-
280
-
-
-
(35)
245
-
-
-
280
(35)
245
Total
$000
463
344
-
(37)
-
(158)
425
64
-
(37)
24
(119)
38
-
-
-
(24)
(4)
357
10
612
949
(524)
425
1,121
(764)
357
182
(144)
38
28
(18)
10
1,131
(668)
463
1,429
(817)
612
The carrying value of plant and equipment held under finance leases and hire purchase contracts at 30
June 2013 is $236,001 (2012: $78,474). Leased assets and assets under hire purchase contracts are
pledged as security for the related finance lease and hire purchase liabilities.
For assets pledged as collateral for the Consolidated Entity’s banking facilities refer to note 21.
Joyce Corporation Ltd 2013 Annual Report I PAGE 70
17.
PLANT AND EQUIPMENT (CONTINUED)
CONSOLIDATED
Leasehold
improvements
$000
Plant and
equipment
$000
Leased
Plant and
Equipment
$000
17
-
-
(13)
-
-
(4)
-
21
(4)
17
-
-
-
707
48
(11)
(150)
18
(62)
(125)
425
1,211
(504)
707
949
(524)
425
198
-
(37)
(41)
(18)
-
(64)
38
482
(284)
198
182
(144)
38
Total
$000
922
48
(48)
(204)
-
(62)
(193)
463
1,714
(792)
922
1,131
(668)
463
Year ended 30 June 2012
At 1 July 2011,
Net of accumulated depreciation
Additions
Disposals
Transfer to assets held for sale
Transfers
Transfer to investment property
Depreciation charge for the year
At 30 June 2012,
Net of accumulated depreciation
At 1 July 2011
Cost
Accumulated depreciation and impairment
Net carrying amount
At 30 June 2012
Cost
Accumulated depreciation and impairment
Net carrying amount
18. INVESTMENT PROPERTY
CONSOLIDATED
Year ended 30 June 2013
Balance at 1 July 2012
Additions
Transfer from plant and equipment
Fair value adjustments
Balance at 30 June 2012
2013
$000
2012
$000
15,000
31
-
1,252
11,100
298
62
3,540
16,283
15,000
The fair value model is applied to investment properties. The investment property, located at Moorebank
in Sydney southwest industrial precinct, was valued by registered independent valuers as at 30 June
2012 and at 30 June 2011. The gross valuation at 30 June 2012 was $15,000,000. Joyce Corporation Ltd
leases its property to Joyce Foam Pty Ltd (the Company which acquired the foam businesses in
November 2005) at a rental less than the current market value until 30 November 2015. The tenant has
options to extend the lease by 5 years and a first right of refusal to buy the property if an offer for
purchase is made by a third party. An independent valuer arrived at the above property valuation after
deducting an amount of $2,963,000 because the existing lease attracts rent at 50% or less than current
market rental yields and the lease has another 2.4 years to run. At the end of the reporting period the
directors have updated their assessment of the fair value of the property after taking into account the
most recent independent valuation. The directors have determined the property’s value within a range of
fair value estimates. This included assessment of recent comparable sales in an active market in
proximity to the investment property based on current rental yield rate trends as advised by valuers and
real estate advisors. The current yield rate was determined to fall between 8.75% and 9.0% which are
improved yields over that determined at 30 June 2012 by an independent valuer. The directors have
determined to adopt the conservative end of the range at 9% yield to determine fair value.
Joyce Corporation Ltd 2013 Annual Report I PAGE 71
19. INTANGIBLE ASSETS
Goodwill (a)
An analysis of intangible assets is presented below:
Year ended 30 June 2013
At 1 July 2012
net of accumulated amortisation
Additions
Impairment
Amortisation
At 30 June 2013,
net of accumulated amortisation
At 1 July 2012
Cost (gross carrying amount)
Accumulated amortisation and impairment
Net carrying amount
At 30 June
Cost (gross carrying amount)
Accumulated amortisation and impairment
Net carrying amount
(a) Goodwill
CONSOLIDATED
2013
$000
2012
$000
10,122
10,222
10,122
10,222
CONSOLIDATED
2013
$000
2012
$000
10,222
-
(100)
-
10,225
-
-
(3)
10,122
10,222
10,569
(347)
10,222
10,569
(447)
10,122
10,569
(344)
10,225
10,569
(347)
10,222
Intangible assets as at 30 June 2013 reflects the value of the Bedshed activities for the Bedshed
Joondalup store which was purchased in May 2007, the Bedshed Claremont store that was purchased in
October 2008 and the remaining 51% of Bedshed Franchising Pty Ltd purchased in 2006.
(b) Impairment Disclosures
Goodwill is allocated to cash-generating units which are based on the Consolidated Entity’s operating
segments
Bedshed Franchising segment
Bedshed Stores segment
Total
CONSOLIDATED
2013
$000
2012
$000
6,306
3,816
10,122
6,306
3,916
10,222
The recoverable amount of each cash-generating unit above is determined based on value-in-use
calculations. Value-in-use is calculated based on the present value of cash flow projections over a 5-year
period with the period extending beyond existing budgets for the 2012/13 and 2013/14 financial years
extrapolated using estimated growth rates. The cash flows are discounted using risk-adjusted pre-tax
discount rates.
Joyce Corporation Ltd 2013 Annual Report I PAGE 72
19. INTANGIBLE ASSETS (CONTINUED)
(b) Impairment Disclosures (continued)
The following assumptions were used in the value-in-use calculations:
Bedshed Franchising segment
Bedshed Stores segment
Discount
Rate
11%
11%
Sales
Growth
Rate
5%
3-5%
Expense
Growth
Rate
3-10%
3-8%
The Consolidated Entity’s value-in-use calculations incorporated a terminal value component beyond the
5 year projection period for both the Bedshed Franchising and Bedshed Stores operating segments. The
principal assumption used to estimate the terminal value of each operating segment was a multiple of 3
times earnings before interest, taxation, depreciation and amortisation for the year ended 30 June 2013.
Impairment of Goodwill for the year ended 30 June 2013 was $100,000 (2012: Nil).
(c) Impact of possible changes in key assumptions
Sensitivity analysis is conducted on changes to discount factors and growth, which do not highlight any
material impairment.
20. TRADE AND OTHER PAYABLES
Current
Unsecured liabilities
Trade payables
Accruals and other payables
Amounts held in trust for Bedshed marketing and other funds (a)
(a) Amounts held in trust for Bedshed marketing and other funds
CONSOLIDATED
2013
$000
604
1,429
3,269
5,302
2012
$000
1,780
1,538
2,600
5,918
Included within the cash and cash equivalents balance are funds allocated for the specific use of the
Bedshed marketing and other funds on behalf of the Consolidated Entity’s franchisee-owned and
Company-owned stores. Refer to note 11 for further information.
(b) Risk exposure
Information about the Consolidated Entity's exposure to foreign exchange risk is provided in note 4.
Joyce Corporation Ltd 2013 Annual Report I PAGE 73
21.
INTEREST BEARING LOANS AND BORROWINGS
Interest bearing loans and borrowings are comprised of the following:
Current
Finance leases
Bank overdrafts – secured (a)
Non-current
Secured liabilities
Finance leases
Bank loans – secured (b)
Convertible Notes
CONSOLIDATED
2013
$000
50
20
70
74
6,300
-
6,374
6,444
2012
$000
60
1
61
2
5,400
-
5,402
5,463
(a)
Bank overdraft - secured
The overdraft facility attracts interest at variable interest rates plus a line fee is renewed annually.
(b)
Bank loans - secured
The Commercial bill facility (fixed) debt attracts interest at a fixed annual interest rate and has a term
which expires on 30 July 2015. The outstanding is $8,000,000 less a $1,700,000 secured deposit.
(c)
Collateral provided
The available St George bank cash and guarantee facility is $1,600,000 (2012: $1,600,000). The unused
cash facility at 30 June 2013 is $640,000 (2012: $640,000) with as cash and cash equivalents held of
$875,022. Further details on the facility are provided in note 4. There is first registered real property
mortgage over the investment property owned by the Consolidated Entity, together with a fixed and
floating charge over the Consolidated Entity assets and cross guarantees from operating subsidiaries as
security over the facility.
The carrying amounts of non-current assets pledged as security are:
Freehold land and buildings
Assets held for sale
Plant and equipment
CONSOLIDATED
2013
$000
16,283
41
612
16,936
2012
$000
15,000
204
463
15,667
Joyce Corporation Ltd 2013 Annual Report I PAGE 74
21. INTEREST BEARING LOANS AND BORROWINGS (CONTINUED)
(e)
Debt covenants
The covenants with St George bank includes:
(cid:120) an interest rate cover ratio of a minimum of 2.00 times where the cover is earnings before
interest, tax, depreciation, amortisation divided by interest charged.
(cid:120) a gearing ratio of a maximum of 2.0 times where gearing is Total Liabilities divided by Total
Equity; and
(cid:120) a limit on dividend payments made where these cannot be greater than 60% of net profit before
interest, tax, depreciation, amortisation and abnormal or one off transactions.
Lease liabilities are secured by the underlying leased assets.
Financial assets that have been pledged as part of the total collateral for the benefit of the bank debt are
as follows:
Cash and cash equivalents
Trade receivables
(f)
Debt classification
CONSOLIDATED
2013
$000
3,439
1,003
4,442
2012
$000
3,774
572
4,346
There was no breach of the Company’s interest cover and gearing ratio debt covenants at 30 June 2013.
As a result, the Consolidated Entity’s bank debt which is due on 30 July 2015 has been classified as non-
current at 30 June 2013, in accordance with applicable accounting standards. A $1,600,000 facility is
available for issue of bank guarantees and overdraft. At the reporting date the overdraft component was
$642,000 with $622,000 undrawn.
(g) Risk exposure
Details of the Consolidated Entity's exposure to risks arising from current and non-current borrowings are
set out in note 4.
(h) Fair values
The carrying amount of the Consolidated Entity’s current and non-current borrowings approximate their
fair value.
Joyce Corporation Ltd 2013 Annual Report I PAGE 75
22. PROVISIONS
Provisions are comprised of the following:
Current
Employee benefits (a)
Sub-lease rental shortfall (b)
Store closure provision (c)
Other
Total Current
Non-current
Employee benefits (a)
Sub-lease rental shortfall (b)
Environmental testing (d)
Total Non-Current
CONSOLIDATED
2013
$000
252
287
351
-
890
53
202
3
258
2012
$000
260
195
950
60
1,465
45
243
3
291
1,148
1,756
(a) Provision for employee benefits
A provision has been recognised for employee benefits relating to long service leave and annual leave. In
calculating the present value of future cash flows in respect of long service leave, the probability of long
service leave being taken is based on historical data. The measurement and recognition criteria relating
to employee benefits have been included in note 2 to this report.
(b) Provision for rental shortfall
A provision continues for the payment of rental shortfalls following the closure of two company owned
stores, one as at 30 June 2010 which continues to October 2014, and one as at 30 June 2013 which
continues to August 2016.
(c) Store Closure Provision
At the 30 June 2013, the Consolidated Entity provisioned for the closure of an unprofitable company
owned store. The provision is for the estimated cost of lease surrender and any loss on realisation of
assets.
(d) Environmental Testing
A provision has been made for ground water testing at the Moorebank property in Sydney as required by
the NSW state authority.
.
Joyce Corporation Ltd 2013 Annual Report I PAGE 76
22. PROVISIONS (CONTINUED)
Sub-let
provision
Store
Closure
Stock
Provision
Employee
Benefits
Franchisee
Settlement
Other
Total
$000
$000
$000
$000
$000
$000
$000
Consolidated Group
Opening balance at 1 July
2012
638
750
- 305
Additional provisions
Amounts used
Balance at 30 June 2013
-
(149)
489
351
(750)
351
- 245
-
-
(245)
305
-
-
-
-
63
1,756
-
596
(60)
(1,204)
3
1,148
(d) Provision for environmental testing
As part of the ongoing testing of Joyce Corporation owned sites it was found that traces of a chemical
used by Joyce Foam Products was detected in the groundwater at the South Australian and New South
Wales properties. The levels found were not high and to be prudent the Department of Environment and
Conservation were notified. Confirmation has been received from the Department of Environment and
Protection that no remediation work is required due to the low risk of harm to the environment; however
an ongoing monitoring program has been established to monitor the nature, extent and movement of the
chemical found.
23. CONTRIBUTED EQUITY
Ordinary shares carry one vote per share and carry the right to dividends.
27,588,255 (2012: 27,588,255) Issued and fully paid ordinary shares
17,347
17,347
CONSOLIDATED
2013
$000
2012
$000
380,000 (2012: 380,000) Partly paid ordinary shares, issued at $1.955
and paid to $1.312 (2011: $1.215) (a)
Movement in ordinary shares on issue
At 1 July 2012
Issued shares:
Payment partly paid shares
At 30 June 2013
(a) Partly-paid ordinary shares
498
467
17,845
17,814
Number
$000
27,588,255
-
-
27,588,255
17,814
-
31
17,845
Partly paid ordinary shares are unquoted until they become fully paid. Partly paid ordinary shares carry
voting rights and rights to participate in entitlement issues although any ordinary shares acquired under a
rights issue cannot be quoted until the partly paid ordinary shares become fully paid.
Joyce Corporation Ltd 2013 Annual Report I PAGE 77
24.
RESERVES
Financial assets reserve
Asset revaluation reserve
CONSOLIDATED
2013
$000
2,698
2,623
5,321
2012
$000
2,698
2,623
5,321
25.
CAPITAL AND LEASING COMMITMENTS
(a)
Finance lease and hire purchase commitments
The Consolidated Entity has finance leases and hire purchase contracts for various items of plant and
machinery, these leases have no terms of renewal or purchase options and escalation clauses.
Future minimum lease payments under finance leases and hire purchase contracts together with the
present value of the net minimum lease payments are as follows:
CONSOLIDATED
Within one year
After one year but not more than five
years
Total minimum lease payments
Less amounts representing finance
charges
Present value of minimum lease
payments
2013
2012
Minimum
payments
$000
Present
value of
payments
$000
Minimum
payments
$000
Present
value of
payments
$000
57
78
135
(11)
-
-
-
-
124
124
63
2
65
(3)
62
-
-
-
-
62
(b) Property lease receivable – Consolidated Entity as lessor
Within one year
After one year but not more than five years
More than five years
CONSOLIDATED
2013
$000
1,107
1,709
-
2,816
2012
$000
790
1,799
-
2,589
Joyce Corporation Ltd 2013 Annual Report I PAGE 78
25. CAPITAL AND LEASING COMMITMENTS (CONTINUED)
The property leases are non-cancellable leases expiring 2015 for a property New South Wales, with rent
receivable monthly in advance. Contingent rental provisions within the lease agreement require the
minimum lease payments to be increased by CPI per annum and or in accordance with a formula linked
to turnover of the lessee.
(c) Property lease payable – Consolidated Entity as lessee
Within one year
After one year but not more than five years
More than five years
CONSOLIDATED
2013
$000
2,715
3,746
1,374
7,835
2011
$000
2,891
4,913
-
7,804
Property leases are non-cancellable leases and have remaining terms of up to five years, with rent
payable monthly in advance. Provisions within the lease agreements require that the minimum lease
payments shall be increased by the CPI per annum. An option exists for most of the leases to renew the
lease at the end of the lease term for an additional term equal to the period of the original lease. If the
lease is renewed the rental rate is adjusted to market value.
(d) Motor vehicle lease payable – Consolidated Entity as lessee
Within one year
After one year but not more than five years
More than five years
CONSOLIDATED
2013
$000
2012
$000
7
12
-
19
54
19
-
73
Motor vehicle leases are non-cancellable leases for Consolidated Entity motor vehicles.
(e)
Capital expenditure commitments
Capital expenditure commitment for investment property
- plant and equipment
Payable:
- within one year
CONSOLIDATED
2013
$000
2012
$000
-
-
-
68
68
68
Joyce Corporation Ltd 2013 Annual Report I PAGE 79
26. CONTINGENT LIABILITIES
(a) Rental Guarantees
Joyce Corporation Ltd has provided guarantees to third parties in relation to property leases for Bedshed
Company owned stores. These guarantees will be required while the stores remain company operated
and currently total $956,130 (2012: $956,130).
27. RELATED PARTY DISCLOSURES
The consolidated financial statements include the financial statements of Joyce Corporation Ltd and the
subsidiaries listed in the following table.
Joyce Rural Pty Ltd
Bedding Investments Pty Ltd
Joyce Industries Pty Ltd
Furniture World Marketing Pty Ltd
Sierra Bedding Pty Ltd
Joyce Indpac Limited
Votraint No. 611 Pty Ltd
Bedshed Franchising Pty Ltd
Furniture World (HK) Pty Ltd
Country of
incorporation
% Equity interest
2012
2013
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Hong Kong
100
100
100
100
100
100
100
100
50
100
100
100
100
100
100
100
100
50
Joyce Corporation Ltd is the ultimate parent of the Consolidated Entity.
Transactions between related parties are on normal commercial terms and conditions no more favourable
than those available to other parties unless otherwise stated.
Transactions with related parties:
(i)
Disclosures relating to directors:-
Those Directors or their Director-related entities received dividend payments, which were made
on the same basis as those made to other shareholders, during the year ended 30 June 2013.
Transactions entered into during the year between the Company and its controlled entities and
Directors of the Company and their Director-related entities were within normal customer or
employee relationships on terms and conditions no more favourable than those available to other
customers or employees.
The Executive directors fees for Mr A Mankarios are paid to Starball Pty Ltd, a company in which
Mr Mankarios has significant influence - $199,257 (2012: $220,106). As at year end the amount
owing to this related party was $9,410.50 (2012: Nil).
A receivable from Pynland Pty Ltd, a company owned by Dan Smetana, for $26,131.50 owing to
Joyce Corporation Ltd for amounts paid on behalf of Pynland Pty Ltd (2012: $19,700.26).
(ii)
(iii)
(vi)
Joyce Corporation Ltd 2013 Annual Report I PAGE 80
28. EVENTS AFTER REPORTING DATE
An unfranked dividend of 1.0 cent per share was declared during the reporting period for shares held at
record date of 3 July 2013 and paid 24 July 2013.
After the reporting date, agreement on closing a regional company owned store has been executed.
These were fully provisioned at the reporting date.
Other than disclosed above no event has occurred since the reporting date to the date of this report that
has significantly affected, or may significantly affect:
(a)
(b)
(c)
the Consolidated Entity’s operations, or
the results of those operations, or
the Consolidated Entity’s state of affairs.
29. AUDITORS’ REMUNERATION
Amounts received or due and receivable by the auditor’s for:
(cid:127)
(cid:127)
an audit or review of the financial report of the Consolidated Entity
other services in relation to the Parent Entity and any other entity
in the Consolidated Entity
(a) tax compliance
(b) assurance related
30. DIVIDENDS
Distributions paid or payable
CONSOLIDATED
2013
$000
2012
$000
82
79
31
3
116
45
26
150
2013
$000
2012
$000
Final unfranked ordinary dividend of Nil (2011 : 2.0 cents) cents per
share (Paid – 18 November 2011)
-
406
Interim unfranked ordinary dividend of 1.5 (2011: Nil) cents per share
(Paid – 02 July 2012)
414
414
Final unfranked ordinary dividend of 0.65 (2011 : Nil) cents per share
(Paid – 28 February 2013)
Prior year dividends paid on partly paid shares (Paid – 30 June 2013)
Interim unfranked ordinary dividend of 1.0 (2012: 1.5 cents) cents per
share (Paid – 24 July 2013)
179
31
280
904
-
-
-
820
To date the directors have not declared the payment of a final dividend out of retained profits at 30
June 2013 and will continue to monitor performance and review resources to determine when a
dividend will be paid.
Joyce Corporation Ltd 2013 Annual Report I PAGE 81
31. KEY MANAGEMENT PERSONNEL DISCLOSURE
(a) Key management personnel compensation
Short Term Benefits
Post Employment Benefits
Share Based Payment
2013
$000
824
102
-
926
2012
$000
990
198
-
1,188
Detailed remuneration disclosures are provided in the remuneration report on pages11 to 16.
(b) Equity instrument disclosures relating to key management personnel
i. Option and rights holdings granted as compensation
During the financial year ended 30 June 2013 no options (2012: Nil) were granted or vested as equity
compensation benefits to any director or executive of the Consolidated Entity.
ii. Option holdings
There were no options on issue to key management personnel during the year ended 30 June 2013
(2012: Nil).
iii. Share Holdings
The number of shares in the company held during the financial year by each director of the company and
the other key management personnel of the Group, including their personally related parties, are set out
below. There were no shares granted during the reporting period as compensation (2012: Nil).
2013
Mr D A Smetana*
Mr T R Hantke
Mr M A Gurry
Mr A Mankarios
Mr G Culmsee
Mr K Gray
Total
2012
Mr D A Smetana*
Mr T R Hantke
Mr M A Gurry
Mr A Mankarios
Mr G Culmsee
Mr K Gray
Ms S Freedman
Total
Balance
01-Jul-12
Ord
Granted as
Remuneration
Ord
On Exercise of
Options
Ord
Net Change
Other
Ord
Balance
30-June-13
Ord
9,798,705
-
-
694,884
-
66,666
10,560,255
-
-
-
-
-
-
-
-
-
-
-
-
-
-
81,991
-
-
2,402
-
-
9,850,696
-
-
697,286
-
66,666
2,402
10,562,657
Balance
01-Jul-11
Ord
Granted as
Remuneration
Ord
On Exercise of
Options
Ord
Net Change
Other
Ord
Balance
30-June-12
Ord
7,082,932
-
-
516,119
-
-
-
7,599,051
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
2,715,733
-
-
178,765
-
66,666
-
9,798,705
-
-
694,884
-
66,666
-
2,961,204
10,560,255
Joyce Corporation Ltd 2013 Annual Report I PAGE 82
31. KEY MANAGEMENT PERSONNEL DISCLOSURE (CONTINUED)
iv. Partly Paid Ordinary Shares Share Holding
The number of partly paid ordinary shares in the company held during the financial year by each director
of the company and the other key management personnel of the Group, including their personally related
parties, are set out below. There were no shares granted during the reporting period as compensation
(2012: Nil).
2013
Mr D A Smetana*
Mr T R Hantke
Mr M A Gurry
Mr A Mankarios
Mr G Culmsee
Mr K Gray
Total
2012
Mr D A Smetana
Mr T R Hantke
Mr M A Gurry
Mr A Mankarios
Mr G Culmsee
Mr K Gray
Ms S Freedman
Balance
01-Jul-12
Ord
Granted as
Remuneration
Ord
On Exercise of
Options
Ord
Net Change
Other
Ord
Balance
30-June-13
Ord
380,000
-
-
-
-
-
380,000
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
380,000
-
-
-
-
-
380,000
Balance
01-Jul-11
Ord
Granted as
Remuneration
Ord
On Exercise of
Options
Ord
Net Change
Other
Ord
Balance
30-June-12
Ord
380,000
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
380,000
-
-
-
-
-
-
Total
380,000
* Beneficial holding only. Mr Smetana controls 10,893,438 fully-paid ordinary shares (2012: 10,893,438).
380,000
-
-
-
All equity transactions with specified directors and specified executives have been entered into under
terms and conditions no more favourable than those the entity would have adopted if dealing at arm’s
length.
Mr D A Smetana also holds 380,000 partly paid (issued at $1.955 and paid to $1.315) ordinary shares of
the Company.
Partly paid shares are unquoted until they become fully paid. Partly paid shares carry voting rights and
rights to participate in entitlement issues although any shares acquired under a rights issue cannot be
quoted until the partly paid shares become fully paid.
(f) Loans to key management personnel
At 30 June 2013 or at any time during the financial year there were no loans (2012: Nil) outstanding to
specified directors and specified executives.
Joyce Corporation Ltd 2013 Annual Report I PAGE 83
32. RECONCILIATION OF NET PROFIT AFTER TAX TO NET CASH FLOWS FROM
OPERATIONS
Reconciliation of net profit (loss) after tax to the net cash
flows from operations
CONSOLIDATED
Net profit/(loss) after taxation
Adjustments for:
Depreciation and amortisation
Interest receivable
Other receivable
Impairment of goodwill
Revaluations of investment properties
Net loss / (profit) on disposal of property, plant and equipment
Franchisee settlement paid
Changes in assets and liabilities
(increase)/decrease in inventories
(increase)/decrease in trade and other receivables
(increase)/decrease in other assets
(increase)/decrease in net deferred income tax assets and
liabilities
(decrease)/increase in income taxes payable
(decrease)/increase in trade and other payables
(decrease)/increase in provisions
Net cash flows used in operating activities
33. NON-CASH INVESTING AND FINANCING ACTIVITIES
Acquisition of leasehold improvements by means of finance lease
Contributed equity – partly paid shares
2013
$000
668
158
33
75
100
(1,261)
90
-
2,179
(442)
129
(125)
-
(484)
(609)
511
CONSOLIDATED
2013
$000
150
34
184
2012
$000
3,035
193
(42)
-
-
(3,553)
1
(601)
114
654
132
(105)
-
170
678
676
2012
$000
-
-
-
Joyce Corporation Ltd 2013 Annual Report I PAGE 84
34. PARENT ENTITY DISCLOSURES
a. Financial position
Assets
Current assets
Non-current assets
Total assets
Liabilities
Current liabilities
Non-current liabilities
Total liabilities
Net Assets
Equity
Issued capital
Retained earnings
Net Equity
b.
Financial performance
Profit/(Loss) for the year
Other comprehensive income
Total comprehensive profit/(loss)
As at 30 June
2013
$000
150
23,789
23,939
483
6,315
6,798
2012
$000
187
21,700
21,887
654
5,672
6,326
17,141
15,561
17,845
(704)
17,141
17,814
(2,253)
15,561
Year ended 30 June
2013
$000
(348)
-
(348)
2012
$000
849
-
849
c. Guarantees entered into by the parent entity in relation to the debts of its subsidiaries
No such guarantees existed at 30 June 2013, other than security arrangement with St George Bank in
respect of interest bearing liabilities discussed in note 21.
d. Contingent liabilities of the parent entity.
No contingent liabilities existed within the parent entity as at 30 June 2013 (30 June 2012: Nil).
e. Commitments for the acquisition of property plant and equipment by the parent entity
Commitments for the acquisition of property plant and equipment by the parent entity existed as at 30
June 2013 for the value of $Nil (30 June 2012: $68,000).
Joyce Corporation Ltd 2013 Annual Report I PAGE 85
DIRECTORS’ DECLARATION
In accordance with a resolution of the Directors of Joyce Corporation Ltd, I state that:
(a) in the Directors’ opinion the financial statements and notes thereto of the Consolidated Entity has
been prepared in accordance with the Corporations Act 2001, including that they:
(i) comply with Australian Accounting Standards and Corporations Regulations 2001; and
(ii) give a true and fair view of the financial position of the Consolidated Entity as at 30 June 2012
and of its performance as represented by the results of its operations and its cash flows for the
year ended on that date; and
(b) the Directors have been given the declarations by the Executive Director and Chief Financial Officer
required by Section 295A;
(c) in the Directors’ opinion, there are reasonable grounds to believe that the Company will be able to
pay its debts as and when they become due and payable; and
(d) the financial report also complies with International Financial Reporting Standards as disclosed in
note 2(a).
Signed in accordance with a resolution of the Directors made pursuant to s.295 (5) of the Corporations
Act 2001.
D A Smetana
Chairman
Perth, 27 September 2013
Joyce Corporation Ltd 2013 Annual Report I PAGE 86
Tel: +8 6382 4600
Fax: +8 6382 4601
www.bdo.com.au
38 Station Street
Subiaco, WA 6008
PO Box 700 West Perth WA 6872
Australia
INDEPENDENT AUDITOR’S REPORT
To the members of Joyce Corporation Limited
Report on the Financial Report
We have audited the accompanying financial report of Joyce Corporation Limited, which comprises the
consolidated statement of financial position as at 30 June 2013, the consolidated statement of profit or
loss and other comprehensive income, the consolidated statement of changes in equity and the
consolidated statement of cash flows for the year then ended, notes comprising a summary of
significant accounting policies and other explanatory information, and the directors’ declaration of the
consolidated entity comprising the company and the entities it controlled at the year’s end or from
time to time during the financial year.
Directors’ Responsibility for the Financial Report
The directors of the company are responsible for the preparation of the financial report that gives a
true and fair view in accordance with Australian Accounting Standards and the Corporations Act 2001
and for such internal control as the directors determine is necessary to enable the preparation of the
financial report that gives a true and fair view and is free from material misstatement, whether due to
fraud or error. In Note 2(a), the directors also state, in accordance with Accounting Standard AASB 101
Presentation of Financial Statements, that the financial statements comply with International
Financial Reporting Standards.
Auditor’s Responsibility
Our responsibility is to express an opinion on the financial report based on our audit. We conducted our
audit in accordance with Australian Auditing Standards. Those standards require that we comply with
relevant ethical requirements relating to audit engagements and plan and perform the audit to obtain
reasonable assurance about whether the financial report is free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in
the financial report. The procedures selected depend on the auditor’s judgement, including the
assessment of the risks of material misstatement of the financial report, whether due to fraud or error.
In making those risk assessments, the auditor considers internal control relevant to the company’s
preparation of the financial report that gives a true and fair view in order to design audit procedures
that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the
effectiveness of the company’s internal control. An audit also includes evaluating the appropriateness
of accounting policies used and the reasonableness of accounting estimates made by the directors, as
well as evaluating the overall presentation of the financial report.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis
for our audit opinion.
Independence
In conducting our audit, we have complied with the independence requirements of the Corporations
Act 2001. We confirm that the independence declaration required by the Corporations Act 2001, which
has been given to the directors of Joyce Corporation Limited, would be in the same terms if given to
the directors as at the time of this auditor’s report.
BDO Audit (WA) Pty Ltd ABN 79 112 284 787 is a member of a national association of independent entities which are all members of BDO (Australia) Ltd ABN 77 050
110 275, an Australian company limited by guarantee. BDO Audit (WA) Pty Ltd and BDO (Australia) Ltd are members of BDO International Ltd, a UK company limited
by guarantee, and form part of the international BDO network of independent member firms. Liability limited by a scheme approved under Professional Standards
Legislation (other than for the acts or omissions of financial services licensees) in each State or Territory other than Tasmania.
Opinion
In our opinion:
(a)
the financial report of Joyce Corporation Limited is in accordance with the Corporations Act 2001,
including:
(i)
giving a true and fair view of the consolidated entity’s financial position as at 30 June 2013
and of its performance for the year ended on that date; and
(ii) complying with Australian Accounting Standards and the Corporations Regulations 2001; and
(b)
the financial report also complies with International Financial Reporting Standards as disclosed in
Note 2(a).
Report on the Remuneration Report
We have audited the Remuneration Report included in the directors’ report for the year ended 30 June
2013. The directors of the company are responsible for the preparation and presentation of the
Remuneration Report in accordance with section 300A of the Corporations Act 2001. Our responsibility
is to express an opinion on the Remuneration Report, based on our audit conducted in accordance with
Australian Auditing Standards.
Opinion
In our opinion, the Remuneration Report of Joyce Corporation Limited for the year ended 30 June 2013
complies with section 300A of the Corporations Act 2001.
BDO Audit (WA) Pty Ltd
Glyn O’Brien
Director
Perth, 27 September 2013
ASX ADDITIONAL INFORMATION
AS AT 25 SEPTEMBER 2013
Additional information required by the Australian Securities Exchange Limited‘s Listing Rules and not
disclosed elsewhere in this report. The information is provided below:
(a) Distribution of Shareholders
Category
As at 25 September 2013
1 - 1,000
1,001 - 5,000
5,001 - 10,000
10,001 - 100,000
100,001 - and over
Total
Holding less than a marketable parcel
Holders
Fully Paid
Ordinary Shares
%
217
172
63
119
31
602
239
70,943
439,858
480.482
0.26
1.59
1.74
4,071,200 14.76
22,525,772 81.65
27,588,255
100.0
95,789
0.35
(b) Shareholdings - Substantial Shareholdings
The number of shares held or controlled at the report date by substantial shareholders was as follows:
Ordinary Shareholder
1. Mr D A Smetana*
2. John Roy Westwood
3. Keith Knowles
Total
Fully Paid
Ordinary
Shares
10,812,314
2,700,000
2,175,302
%
38.7
9.8
7.9
15,687,616
56.4
* Mr Smetana has beneficial interest in 9,850,696 fully-paid ordinary shares (2012: 9,798,705) and
380,000 partly paid shares.
(c) Voting Rights
The voting rights attached to each class of equity security are as follows:
Ordinary shares
Each ordinary share is entitled to one vote when a poll is called, otherwise each member present at a
meeting or by proxy has one vote on a show of hands.
Joyce Corporation Ltd 2013 Annual Report I PAGE 89
ASX ADDITIONAL INFORMATION (CONTINUED)
AS AT 25 September 2013
(d)
Shareholdings - Twenty Largest Holders of Quoted Equity Securities - ungrouped
The number of shares held at the report date by the twenty largest holders of quoted equity securities:
Ordinary Shareholder
Fully Paid
Ordinary Shares
Adamic Pty Ltd
UFBA Pty Ltd
Peduncle Pty Ltd
1.
2.
3.
4. Wallbay Pty Ltd
Sandhurst Trustees Ltd
5
Mr Donald Teo
6.
Mr Keith Knowles
7.
Mr Daniel Alexander Smetana
8.
9.
Parks Australia Pty Ltd
10. McNeil Nominees Pty Limited
11. Starball Pty Ltd
12. Mrs Edna Knowles
13. Mr Dan Smetana
14. Conard Holdings Pty Ltd
15. ASB Nominees Limited <130368 – ML A/C>
16. P B L Investments Pty Ltd
17. Mr Richard Hamilton Bartlett
18. Mr Keith Knowles
19. Mr John Martin Wright
20.
Bellpam Pty Limited
Total
7,711,568
2,700,000
1,948,312
998,356
990,233
990,000
906,368
563,726
544,021
499,974
430,029
342,376
354,022
347,940
336,256
270,203
245,400
238,523
229,463
207,500
20,880,598
%
27.95
9.79
7.06
3.62
3.59
3.59
3.29
2.04
1.97
1.81
1.56
1.34
1.28
1.26
1.22
0.98
0.89
0.86
0.83
0.75
75.69%
(e)
Unquoted Partly Paid Shares holdings greater than 20%
Ordinary Shareholder
Mr D A Smetana
Total
Partly Paid
Ordinary
Shares
380,000
380,000
%
100
100
Partly paid shares are unquoted until they become fully paid. Partly paid shares carry voting rights and
rights to participate in entitlement issues although any shares acquired under a rights issue cannot be
quoted until the partly paid shares become fully paid.
Joyce Corporation Ltd 2013 Annual Report I PAGE 90
ASX ADDITIONAL INFORMATION (CONTINUED)
AS AT 25 SEPTEMBER 2013
(f)
Company Secretary
Mr Keith Gray
(g)
Registered Office
14 Collingwood Street,
Osborne Park, WA,
AUSTRALIA, 6017
Tel: +61 8 9445 1055
(h)
Share Registry
Computershare Investor Services Pty Limited
Level 2, Reserve Bank Building,
45 St Georges Terrace
Perth, WA 6000
Tel: 1300 557 010
Joyce Corporation Ltd 2013 Annual Report I PAGE 91